Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren have introduced the Promoting Innovation in Blockchain Development Act of 2026, a bipartisan proposal aimed at narrowing how federal money transmission laws apply to blockchain developers.
The legislation specifically addresses Section 1960 of Title 18 of the U.S. Code, which governs unlicensed money transmitting businesses, and seeks to clarify when criminal liability applies in the context of decentralized software.
The bill stipulates that criminal liability under Section 1960 would apply only to entities that exercise control over customer funds.
This distinction draws a line between custodial financial intermediaries and non-custodial software providers, aiming to prevent broad interpretations that extend liability to developers without operational control.
The legislation would explicitly exclude:
from being classified as money transmitters solely for writing, publishing, or maintaining blockchain code.
The proposal reinforces the principle that publishing open-source software, in itself, does not constitute financial intermediation.
Lawmakers introduced the bill following high-profile prosecutions involving developers linked to Tornado Cash and Samourai Wallet.
Those cases sparked debate within the industry over whether enforcement actions had extended beyond custodial actors and into the realm of code publication. Supporters of the bill argue that clearer statutory language is necessary to prevent regulatory overreach and to protect non-custodial infrastructure development.
The bill arrives amid a broader wave of crypto-related legislative activity in early 2026.
Industry advocacy groups such as Blockchain Association and DeFi Education Fund have publicly supported the measure, describing it as essential for maintaining U.S. competitiveness in blockchain innovation.
If enacted, the legislation would formally separate:
The bill does not remove anti-money laundering requirements for entities that control customer assets. Instead, it narrows the scope of criminal liability to align with operational control rather than code publication.
Its passage would mark a significant clarification in U.S. crypto policy, particularly in defining how legacy financial statutes apply to decentralized systems. Whether the measure advances will depend on congressional negotiations and parallel progress on broader digital asset legislation.
