New CLARITY Act Draft Could Shield Bitcoin and Crypto Developers From Past Liability

Bitcoin Magazine

New CLARITY Act Draft Could Shield Bitcoin and Crypto Developers From Past Liability

On Friday, the U.S. Senate Banking Committee released its latest draft of the CLARITY Act (CLARITY), in which it proposes an amendment to 18 U.S. Code § 1960(a) stipulates that only crypto developers or providers that “knowingly exercise control over currency, funds, or other value that substitutes for currency” be treated as money transmitting businesses.

What is more, this amendment would not only protect Bitcoin and crypto developers in the wake of a bill with this language included in its passing, but it would also protect said developers retroactively.

In Section 501 of section Title V of the draft, entitled “Protecting Software Developers and Software Innovation,” it states that “This section, and the amendments made by this section, shall apply to conduct occurring before, on, or after the date of enactment of this Act.”

If this language is included in a version of the bill that is enacted into law, Tornado Cash developer Roman Storm, who was found guilty of operating an unlicensed money transmitting business last month, stands to benefit.

Storm has alluded to the notion that he plans to appeal the guilty verdict, as per reporting by Eleanor Terrett.

If CLARITY becomes law and the language regarding retroactive developer protection is included in the draft of the bill that passes, Storm’s legal team should theoretically have no issue winning at the appellate level.

Unfortunately, if CLARITY passes with the retroactive protections included, this will not help the Samourai Wallet Developers, who accepted a plea deal for operating an unlicensed money transmitting business in July.

This most recent draft of CLARITY also stipulates that developers or providers of “non-controlling” (noncustodial) crypto technology shall not be treated as money transmitting businesses under 31 U.S. Code § 5330. This would also be applied retroactively.

Non-controlling developers are defined as those who create or work on “distributed ledger service(s), that in the regular course of operations, does not have the legal right of the unilateral and independent ability to control, initiate upon demand, or effectuate transactions involving digital assets to which users are entitled, without the approval, consent, or direction of any other third party.”

The definition applies to developers of crypto services, software, or hardware that helps customers facilitate the self custody and safekeeping of digital assets.

Congress is back in session as of September 2, 2025, and the U.S. Senate Banking Committee plans to continue to prioritize CLARITY, after accepting input on the bill from many members of the crypto industry.

“This legislative draft reflects feedback from hundreds of stakeholders on a wide range of questions as part of the Request for Information (RFI) on the July discussion draft,” a spokesperson from the Senate Banking Committee told Bitcoin Magazine. “Chairman Scott, Senator Lummis, and their colleagues will continue working in a bipartisan way to deliver a final product that will protect investors, foster innovation, and keep the future of digital finance anchored in America.”

No hearings regarding the bill are currently on the Senate Banking Committee’s calendar.

This post New CLARITY Act Draft Could Shield Bitcoin and Crypto Developers From Past Liability first appeared on Bitcoin Magazine and is written by Frank Corva.