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FollowingSenator Ron Wyden urges the Senate to retain the blockchain developer protection provisions in the CLARITY Act.
Senator Ron Wyden, Democrat of Oregon, has formally sent a letter to the Senate leadership urging them to retain Section 604 of the CLARITY Act in its entirety when the bill enters the full vote stage.
In a letter to Senate Majority Whip John Thun and Minority Leader Chuck Schumer, Wyden pointed out that deleting section 604 (the Blockchain Regulation Determinism Act) would undermine both innovation and reasonable enforcement.
The Blockchain Regulation Definiteness Act was originally introduced as a separate bill earlier this year by Senator Cynthia Loomis, Republican of Wyoming, and was subsequently integrated into the broader CLARITY Act. Wyden is the only Democratic co-sponsor of the clause.
The core content of section 604
Essentially, the Blockchain Regulatory Determinities Act would create a legal safe haven to ensure that non-custodial blockchain software developers-that is, code developers who never hold or control user funds-are not classified as money transmitters under the Bank Secrecy Act. This classification brings compliance obligations such as licensing, know your customers, and anti-money laundering.
Wyden believes that the clause simply translates existing federal policy into culture, clarifying that developers should not be regarded as money transmitters simply because they create or publish software. He wrote that this position reflects existing guidelines from the Financial Crimes Enforcement Network (FinCEN) and is consistent with emerging case law.
Crucially, Wyden pointed out that the clause has an exception built into: Any unmanaged developer caught transferring or using funds from illegal activities will not be protected. In this way, bad actors can still be held accountable, and neutral software developers will not be treated as financial intermediaries.
A high-risk controversial clause
Despite industry support, some law enforcement agencies have expressed opposition to the Blockchain Regulatory Definiteness Act, mainly concerned that the clause may weaken protections used to combat human trafficking, money laundering and other illegal activities.
Wyden directly refuted these claims, arguing that critics inaccurately claimed that the bill would weaken anti-money laundering and anti-terrorist financing laws.
He warned that without the clause, blockchain innovation could move overseas to jurisdictions with clearer rules.
The CLARITY Act is scheduled to be voted on July 17 in the Senate after members return from recess. However, due to many unresolved disputes, its probability of passing has been hovering between 40% and 50%.
Section 604 represents the bill\'s most practical innovation for the DeFi protocol ecosystem currently facing continued legal uncertainty.
