Republican Senator Cynthia Lummis and Democratic Senator Ron Wyden are moving to spotlight one of the most contentious issues in U.S. crypto regulation by introducing a standalone bill aimed at protecting decentralized finance (DeFi) software developers. The proposal comes as Washington awaits the release of a new draft of the Senate’s broader crypto market structure legislation, expected as early as Monday.
At the center of the debate is whether developers who build non-custodial blockchain software should be treated as money transmitters under U.S. law. The crypto industry has long argued that developers who do not control user funds or transactions should not face the same regulatory burdens as banks or financial intermediaries. While earlier drafts of the Senate market structure bill included language shielding such developers, that provision has remained under negotiation.
The new bipartisan effort revives the Blockchain Regulatory Certainty Act, which was originally introduced in the House of Representatives. By bringing it forward as a separate Senate bill, Lummis and Wyden aim to reinforce bipartisan support for DeFi protections and apply pressure to keep the language intact within the larger crypto framework. Lummis emphasized that writing code should not automatically subject developers to bank-style regulation, a view widely shared among DeFi advocates.
Meanwhile, negotiations around the broader crypto market structure bill remain tense. Key unresolved issues include illicit finance safeguards, the regulatory treatment of DeFi, stablecoin yield and rewards, and Democratic demands to address potential conflicts of interest involving senior government officials and the crypto industry. Bank lobbyists have also entered the debate, particularly over whether crypto firms should be allowed to offer interest or rewards on stablecoins.
Industry leaders are drawing firm lines. Coinbase CEO Brian Armstrong has publicly stated that his company would oppose any bill that restricts stablecoin rewards, calling it a “red line” issue. With crypto firms having spent heavily on political campaigns in recent years, the outcome of these negotiations could have significant political and financial implications.
As the Senate Banking Committee prepares for a markup hearing this week and the Agriculture Committee delays its own review until later in January, the fate of U.S. crypto regulation remains uncertain. Whether the final bill reflects months of bipartisan compromise or a more partisan approach will soon become clear.
