Lummis–Wyden Bill Protects Non-Custodial Crypto Developers

The bipartisan Blockchain Regulatory Certainty Act aims to provide regulatory protection for non-custodial cryptocurrency developers by exempting them from money transmitter rules, helping to minimize legal risks and encouraging them to innovate in the U.S.

Key Takeaways

Bipartisan Support: Senators Lummis and Wyden propose the Blockchain Regulatory Certainty Act to ease regulatory burdens for non-custodial developers.
Legal Exemptions: The bill exempts developers who do not control user funds from federal and state money transmitter rules.
Definition of Non-Money Transmitters: It establishes a legal distinction that protects software developers and blockchain network maintainers.
Regulatory Clarity: The legislation responds to growing enforcement actions against non-custodial protocols, aiming to foster innovation and retain talent in the U.S.
Scope of the Bill: While it benefits developers, the bill does not restrict regulations for cryptocurrency exchanges or brokers, ensuring ongoing oversight.

Lummis–Wyden bill protects non-custodial crypto developers

Two U.S. senators introduced bipartisan legislation on January 12, 2026, designed to clarify regulations for cryptocurrency developers by exempting non-custodial creators from licensing requirements related to money transmission.

Main Content

Senators Cynthia Lummis, a Republican, and Ron Wyden, a Democrat, have proposed the Blockchain Regulatory Certainty Act to tackle the regulatory confusion that many developers in the digital asset sector currently face. According to their statements, this bipartisan bill is meant to exempt cryptocurrency developers who do not handle or oversee user funds from both federal and state money transmitter rules.

Under this proposed legislation, activities such as developing software, writing code, or maintaining blockchain networks would not require a license. The legislation clearly defines developers without unilateral control over user assets as non-money transmitters. This creates a legal distinction that separates infrastructure development from custodial financial activities. The protected activities include blockchain software development, maintenance of decentralized networks, self-custody solutions, and infrastructure services.

Senator Lummis pointed out that developers have been threatened by regulatory actions even when they do not have custody over funds, claiming that the current money transmitter classifications stifle innovation without effectively mitigating money laundering risks. Senator Wyden echoed this sentiment, expressing concerns about privacy and free speech. He stated that enforcing rules meant for exchanges on code writers misrepresents the technology’s nature.

There is significant concern among blockchain developers regarding potential criminal liability arising from third-party use of their software. This fear has prompted some projects to move their operations overseas to evade regulatory challenges, as highlighted by the senators.

This legislation reflects a growing response to heightened enforcement actions targeting non-custodial protocols that have raised alarm among developers in recent years. The bipartisan nature of this bill indicates an unusual consensus on cryptocurrency policy between the two major U.S. political parties.

Currently, the bill stands as a standalone piece of legislation in the Senate, though it may eventually be included in more comprehensive market structure proposals, as noted by congressional sources. Ongoing negotiations about the final legislative framework are in progress.

Industry stakeholders have shown support for clearer distinctions between developers and financial intermediaries, arguing that this bill could alleviate compliance uncertainties and stimulate domestic blockchain development. Advocates suggest that the legislation aims to sustain U.S. competitiveness in the realm of digital finance by nurturing talent and attracting investment.

Importantly, the legislation does not restrict the regulation of cryptocurrency exchanges or brokers. Senator Wyden emphasized that the enforcement of tax and trading regulations will remain intact, clarifying that the bill aims to refine regulatory focus rather than loosen oversight.

The measure embodies the principle of technology neutrality, with lawmakers asserting that regulations should center on functional purposes rather than the creation of code, aligning with previous internet regulatory approaches.

The future of this bill hinges on broader negotiations within the Senate; however, its introduction demonstrates lawmakers' readiness to update regulatory frameworks for emerging financial technologies.