A crypto developer was convicted last year of operating a remittance business without a license. That case – and others like it – are now fueling the sharpest disagreement in Washington over how the US plans to regulate the financial markets it powers.
Confidence That Changed the Conversation
Roman Storm, the founder of the cryptocurrency mixing platform, Tornado Cash, was found guilty in August 2025 of conspiracy charges related to the operation of an unauthorized money transfer service.
His conviction sent shockwaves through the engineering community. It also makes the legal explanations buried within the pending crypto laws feel more urgent.
That backlog is now sparking a public dispute between Senator Cynthia Lummis and prominent crypto advocate Jake Chervinsky over whether the Digital Assets Market Transparency Act — widely known as the CLARITY Act — actually protects the developers it claims to protect.
Sen. Cynthia Lummis. Image: Tom Williams/CQ Roll Call via AP file
Don’t believe the FUD– we’ve worked together over the past few weeks to make changes to Title 3 that make this bill the strongest protection for DeFi and developers ever enacted. We must pass the Clarification Act to get these protections.
— Senator Cynthia Lummis (@SenLummis) March 27, 2026
The CLARITY Act: What Chervinsky Discovered
Chervinsky’s concern is straightforward. Title 3 of the Senate Banking Committee’s current draft, he says, contains money-transmitting language broad enough to draw noncustodial software developers into the realm of the Bank Secrecy Act — meaning KYC obligations and the regulatory exposure that comes with them.
His position: that outcome would effectively shut down the Blockchain Regulatory Certainty Act, which was written precisely to keep non-custodial developers out of that category.
But the draft also has provisions in Article 3 that undermine the BRCA and subject all kinds of software developers to not being kept from KYC obligations anyway.
Those sections have to be fixed or the bill doesn’t apply to DeFi.
If a bill doesn’t apply to DeFi, it doesn’t apply at all.
– Jake Chervinsky (@jchervinsky) March 26, 2026
“The biggest challenge is to make sure that software developers who are not custodians are not mislabeled as money transmitters,” said Chervinsky. He called this issue that it cannot be discussed with DeFi, and said that it is still pending.
The tension it creates is not small. Section 604 of the CLARITY Act excludes the BRCA, which states that developers who do not hold or control user funds should not be considered financial institutions. But Chervinsky’s reading is that some of the language in Article 3 creates enough ambiguity to invalidate that protection.
On Friday, Lummis fired straight. He said recent bipartisan revisions to Title 3 make the bill the strongest protections for DeFi developers ever put into law.
“Don’t believe the FUD,” he wrote on X, urging fans to support the passage of the law.
The document is not yet in the public domain
While previous drafts of the CLARITY Act have been made public, recent revisions have been discussed Cynthia Lummis they have not been fully released. That means the specific changes he describes cannot be independently verified – at least not yet.
What is known: the bill is gaining momentum. Bipartisan progress on stablecoin reward provisions has brought it closer to the Senate Banking Committee’s markup, which is expected sometime in April.
Chervinsky noted that those stablecoin provisions have consumed much of the public’s attention, leaving the developer protection debate behind despite its importance.
For developers looking closely, the stakes couldn’t be more tangible. The question of whether writing unmaintained software qualifies one to be a money transmitter is not a hypothetical one.
Roman Storm got that on the court. Until the revised text of the CLARITY Act is available for review, the only industry confirmation is the parliamentarian’s name on social media.
Featured image from Pexels, chart from TradingView
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