Sun March 1, 2026 ▪
4
min read ▪ by
A bipartisan group of US lawmakers has introduced new legislation aimed at protecting blockchain software developers from certain criminal charges. Sponsors say the proposal would clarify how federal law applies to developers who don’t control user resources. Proponents argue that recent prosecutions have created legal uncertainty for builders working on open-source tools. The measure adds to the broader debate in Congress about the regulation of digital assets.
In short
- The Bill limits liability to parties that manage or control user digital assets.
- Non-custodial developers would not qualify as money transmitters under § 1960.
- Industry groups say the measure could prevent future prosecutions of cryptocurrency developers.
- Senate lawmakers are making parallel efforts to clarify developer protections.
House Targets Prosecutorial Reach in Crypto Developer Cases
Representatives Scott Fitzgerald, Ben Cline and Zoe Lofgren introduced the Blockchain Innovation Support Act on Thursday. The measure aims to clarify how blockchain developers are subject to Section 1960 of the federal law, which prohibits operating an unlicensed money transfer business.
Under the proposal, criminal liability would only apply to individuals or entities that exercise custody or control over another person’s digital assets. Developers who simply write code or maintain blockchain infrastructure without handling customer funds would not meet the legal definition of a money transmitter.
The Blockchain Association called the bill a critical protection for US-based developers, while the DeFi Education Fund said it could help prevent prosecutions similar to those brought against privacy-focused toolmakers.
According to the DeFi Education Fund, the legislation makes it clear that developers who do not take user funds can create neutral open source software without being treated as financial intermediaries under criminal law.
Congress Considers Safe Harbor for Blockchain Code Authors
Proponents argue that setting clearer boundaries would have practical implications for several segments of the blockchain ecosystem:
- Open source contributors could publish and maintain code without fear of being classified as money changers.
- Developers of decentralized protocols would avoid liability if they do not have custody or control over user assets.
- Infrastructure operators – including node administrators and transaction verifiers – would not automatically face criminal activity.
- Courts would gain clearer legal standards in determining whether a blockchain development activity constitutes the operation of a financial service.
The push for clarification follows a series of high-profile cases involving cryptocurrency developers. In August 2025, Roman Storm was found guilty of operating an unlicensed money transfer business.
In July, Keonne Rodriguez and William Lonergan Hill pleaded guilty to similar charges and were later sentenced to five and four years in prison, respectively. Storm has not yet been sentenced and could face further proceedings on other charges.
Whether the new legislation would apply retroactively to past or ongoing cases remains an open question.
Senators Cynthia Lummis and Ron Wyden introduced the Blockchain Regulatory Certainty Act in January, seeking to confirm that writing code or maintaining decentralized networks does not in itself constitute operating an unlicensed money transfer business.
Meanwhile, lawmakers continue to review broader market structure reforms. The CLARITY Act passed the Senate Agriculture Committee in January but has not yet received a markup in the Senate Banking Committee. It remains unclear whether the final legislation will specifically include developer protections as negotiations continue in both chambers.
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James Godstime is a crypto journalist and market analyst with over three years of experience in crypto, Web3 and finance. Simplifies complex and technical ideas to engage the reader. Outside of work, he likes football and tennis, which he is passionate about.
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