The world of decentralized finance (DeFi) appears to be walking a "legal tightrope" in the fog, but a new bill in the U.S. Congress promises to bring much-needed "clarity." A recent amended version of the Act #CLARITY (247 pages) includes new provisions that could provide long-awaited legal protections for crypto developers, wallet makers, and infrastructure providers.
The bill is sponsored by members of the House Republican Party, including French Hill, Dusty Johnson, and Senator Tom Emmer. The latest amendment, known as the Amendment on the Nature of the Substitute Proposal, adds an important provision: it stipulates that "non-controlling" developers – including those who write or publish code, provide non-custodial wallets, or maintain blockchain infrastructure – "will not be considered a money transmitter" solely based on those actions.
This may be the first time this distinction has been incorporated into law, and it will be a significant benefit for DeFi developers. In recent years, developers behind projects like Tornado Cash and Samourai Wallet have faced criminal charges for allegedly operating unlicensed money transmission businesses, despite not holding customer funds. These cases have drawn criticism from the crypto industry and digital rights advocates, who argue that publishing code or facilitating users' self-custody should not be treated the same as transferring money on behalf of others.
However, this "safe harbor" only applies to these "non-controlling developers," and their exact definition might be debated as the bill progresses. Protocols with governance keys or internal influence may not qualify.
Additionally, the bill also contains other notable points:
Exemption from oversight#CFTC : Another significant part of the bill will exempt a range of decentralized financial activities from the oversight of the Commodity Futures Trading Commission (CFTC), as long as they do not involve fraud or manipulation. Node operators, oracle providers, liquidity pool participants, and wallet developers will not be required to register under commodity laws just for providing infrastructure or tools.
New definition of "blockchain controller": A new definition of "blockchain controller" aims to restrict the sale of tokens by insiders who hold unilateral power over a protocol, especially for projects deemed "mature" under the bill's decentralization test.
The House Financial Services Committee is expected to hold a hearing on Tuesday for lawmakers to debate and vote on the proposed amendments. This is a significant step forward, bringing hope for a clearer legal framework, reducing uncertainty, and facilitating the development of the DeFi ecosystem. #anhbacong