The crypto industry’s Washington lobbyists are trying to draw a line in the sand over the market structure bill that’s steaming through the U.S. Senate, saying they can’t back a law that wouldn’t fully protect software developers from being held responsible for bad actors abusing their technology.
The industry made its case to the Senate’s Banking and Agriculture committees “with one voice,” sending a letter Wednesday signed by Coinbase, Kraken, Ripple, a16z, Uniswap Labs and more than a hundred other crypto businesses and organizations, including almost all of the major U.S. lobbying groups. This unified effort comes the week before the Senate gets back to work, and likely rekindles full negotiations on the language of the legislation that represents the industry’s top U.S. goal.
“Provide robust, nationwide protections for software developers and non-custodial service providers in market structure legislation,” the letter said. “Without such protections, we cannot support a market structure bill.”
A bill to regulate how crypto is overseen in the U.S. has already passed the U.S. House of Representatives in a version known as the Digital Asset Market Clarity Act. It’s now in the hands of the Senate, where Senator Tim Scott, the chairman of the Senate Banking Committee had vowed for months the lawmakers would finish work by the end of September.
“No group is more important to this country’s digital financial future than the software developers building it,” said Amanda Tuminelli, executive director of the DeFi Education Fund, in a statement. “In the largest crypto advocacy coalition in history, over 110 organizations, builders and investors came together with DEF to ask congressional leaders to protect software developers and non-custodial service providers in federal market structure legislation.
As the lawmakers get back to the bill after their August recess, the industry wants them to consider this central point:
“It is critical that legislation recognizes and preserves the historical protections afforded to open-source software development, and ensures that software developers and non-custodial service providers who create, support, and enable access to decentralized networks are not forced into unworkable regulatory categories designed for the traditional, intermediated financial world,” according to the letter, led by the DEF and joined by the Blockchain Association, Digital Chamber, Crypto Council for Innovation, Solana Policy Institute and many others.
A few years ago, such an argument may have fallen on deaf ears in Washington, but these same companies have become a political powerhouse, largely through amassing funds at a political action committee — Fairshake and its affiliate PACs — that expended more than $130 million in last year’s congressional elections and has so far gathered more than $140 million for next year’s.
So far this year, crypto’s congressional progress has been unprecedented, with huge bipartisan votes on crypto-related action, culminating with the approval of the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act to oversee stablecoin issuers.
But the market structure bill is expected to be the sector’s greatest test. While the Clarity Act included developer safeguards, lobbyists have already grown concerned that Senator Mark Warner, the vice chairman of the Senate Select Committee on Intelligence, will press for some legal liabilities on crypto software creators. And the courts have also added pressure, with federal prosecutors recently obtaining convictions in multiple high-profile developer cases — most notably, that of Tornado Cash and Roman Storm.
The industry did welcome the recent remarks from a senior Department of Justice official that their prosecutors won’t be chasing crypto developers who aren’t intentionally getting into money laundering, only a new law can give permanent assurance.
Read More: Roman Storm Guilty of Unlicensed Money Transmitting Conspiracy in Partial Verdict
