US Senators Cynthia Lummis (R-Wyo.) and Ron Wyden (D-Ore.) have introduced the Blockchain Regulatory Certainty Act of 2026 (BRCA), a bipartisan bill designed to draw a clear legal line between financial institutions and software developers in the blockchain space. The standalone legislation, introduced on January 12 and currently under consideration by the Senate Banking Committee, seeks to ensure that blockchain developers and service providers who never take custody of user assets are not treated as money transmitters under federal and state law.
TL;DR
- Senators Lummis and Wyden introduce the Blockchain Regulatory Certainty Act (BRCA) as standalone bipartisan legislation
- The bill exempts non-custodial blockchain developers from money transmitter regulations
- BRCA establishes clear federal standards for when developers and service providers qualify for exemptions
- The legislation addresses years of legal uncertainty intensified by enforcement actions against projects like Tornado Cash
- Similar language is being considered as part of the broader crypto market structure package advancing through Congress
The Core Problem: Code vs. Money Transmission
For years, blockchain developers have operated under a cloud of legal uncertainty. Under existing interpretations of federal and state money transmitter regulations, there is an ongoing question of whether writing open-source code or maintaining decentralized network infrastructure constitutes money transmission. The ambiguity has had a chilling effect on innovation, as developers worry they could face criminal or civil liability based simply on how third parties use their software.
Senator Lummis addressed this concern directly, stating that treating developers as financial institutions “makes no sense” when they never control or access user funds. “Writing code is not the same as controlling money,” she wrote on social media. “Developers who build blockchain infrastructure without touching user funds shouldn’t be treated like banks.”
Senator Wyden, who serves as the powerful Finance Committee Chairman, echoed the sentiment, emphasizing that the BRCA establishes clear federal standards for when blockchain developers and service providers are exempt from money transmitter regulations. The bipartisan nature of the bill—combining Wyden’s Democratic influence with Lummis’s Republican expertise on digital assets—gives it significant political weight.
What the BRCA Actually Does
The Blockchain Regulatory Certainty Act introduces a straightforward principle: if you do not take custody of user funds, you are not a money transmitter. Under the proposed legislation, blockchain developers and service providers would be exempt from federal and state money transmitter registration and compliance requirements as long as they meet specific criteria demonstrating they never handle, control, or have access to customer assets.
The bill provides a detailed framework for determining what constitutes “custody” versus merely providing software or infrastructure services. This distinction is critical in the context of decentralized networks, where transactions are validated by distributed nodes rather than processed through a central intermediary. Under current law, the operators of those nodes could theoretically be classified as money transmitters, even though they never have the ability to intercept, redirect, or freeze user funds.
The legislation also establishes safe harbor provisions for developers who publish open-source software, protecting them from liability when their code is used by third parties for purposes the developers did not intend or endorse. This provision directly addresses the concerns raised by high-profile enforcement cases in recent years.
The Tornado Cash Shadow
The introduction of BRCA cannot be separated from the broader context of enforcement actions against crypto developers. The prosecution of developers associated with Tornado Cash, an open-source privacy tool on the Ethereum network, sent shockwaves through the developer community. The case raised fundamental questions about whether writing and publishing code constitutes a criminal act when that code is subsequently used by bad actors.
Privacy advocates and civil liberties organizations have argued that prosecuting developers for code published freely online violates fundamental principles of free speech and innovation. Law enforcement agencies, on the other hand, have maintained that developers who create tools used for money laundering bear some responsibility for the resulting criminal activity. The BRCA seeks to resolve this tension by providing a clear statutory exemption for developers who do not control user funds.
Industry Reaction and Support
The blockchain industry has broadly welcomed the BRCA as a long-overdue clarification. Major crypto advocacy organizations, including the Blockchain Association and the DeFi Education Fund, have endorsed the bill, arguing that the current legal ambiguity has driven developer talent overseas and discouraged investment in US-based blockchain projects.
Developer communities have been particularly vocal in their support. Open-source contributors have long argued that the threat of prosecution under money transmitter laws is one of the most significant barriers to building decentralized infrastructure in the United States. The BRCA, if enacted, would remove that barrier and potentially reverse the brain drain that has seen many prominent blockchain developers relocate to jurisdictions with clearer legal frameworks.
Critics of the bill, however, warn that overly broad exemptions could create loopholes that allow bad actors to operate with impunity. Some consumer protection advocates argue that the distinction between “custody” and “non-custody” is not always clear-cut, particularly in the context of complex smart contract systems where the lines between developer, operator, and intermediary can blur.
BRCA Within the Broader Legislative Landscape
The BRCA has been introduced as a standalone measure, but its provisions are also being debated as part of the broader crypto market structure legislation moving through the Senate Banking and Agriculture Committees on January 15. The dual-track approach reflects a strategic decision by Lummis and Wyden: even if the broader market structure bill stalls, the BRCA could advance independently as a narrower, more targeted measure.
The standalone nature of the bill also makes it easier to build bipartisan consensus. Unlike the comprehensive market structure legislation, which touches on contentious issues like SEC jurisdiction and token classification, the BRCA addresses a relatively straightforward question with broad appeal across party lines. Both parties have expressed support for protecting innovation and ensuring that the United States remains competitive in the global technology landscape.
The bill has been referred to the Senate Committee on Banking, Housing, and Urban Affairs, where it will be considered alongside the broader market structure legislation. If the Banking Committee advances the bill, it could move to the Senate floor relatively quickly, given its bipartisan sponsorship and focused scope.
International Context
The BRCA also comes at a time when other jurisdictions are moving forward with their own regulatory frameworks for digital assets. The European Union’s Markets in Crypto-Assets Regulation (MiCA) has been fully effective since late 2024, providing clear rules for crypto businesses operating in the EU. The United Kingdom has also advanced its own regulatory proposals, and Singapore, Japan, and the UAE have established comprehensive licensing regimes.
In this competitive landscape, supporters of the BRCA argue that the United States cannot afford to maintain legal ambiguity that drives innovation offshore. The bill represents a targeted effort to address one of the most pressing regulatory gaps while the broader market structure legislation works its way through the congressional process.
Why This Matters
The Blockchain Regulatory Certainty Act represents a fundamental shift in how lawmakers think about the relationship between code and financial regulation. For the first time, Congress is considering legislation that explicitly recognizes that writing software is not the same as running a financial institution. If enacted, the BRCA would provide the legal clarity that blockchain developers need to build in the United States without fear of prosecution, potentially reversing the exodus of talent and capital to friendlier jurisdictions.
The bipartisan support for the bill also signals a growing recognition in Washington that the crypto policy debate is not monolithic. While disagreements persist on issues like stablecoin regulation and SEC enforcement, there is emerging consensus that developers who never handle user funds deserve clear legal protections. The BRCA could serve as a template for future legislation addressing other aspects of the decentralized technology stack.
Disclaimer: This article is for informational purposes only and does not constitute financial or legal advice. Legislative proposals are subject to change during the legislative process, and readers should consult qualified legal professionals for guidance on compliance with applicable regulations.
as someone who writes smart contracts for a living, this bill is the most important thing happening in crypto regulation right now. the tornado cash precedent scared a lot of devs away from the US
Lummis saying writing code isnt the same as controlling money should be obvious but here we are, needing a whole bill to state it
Wyden co-sponsoring is significant. getting bipartisan support for anything crypto related has been nearly impossible