A New Era for Blockchain Developers: Legal Protection on the Horizon

A New Era for Blockchain Developers: Legal Protection on the Horizon – featured image

Building software has never been against the law. Yet, in a climate of increasing scrutiny, several crypto and blockchain developers have faced federal criminal charges for creating tools that facilitate cryptocurrency transactions, despite never directly handling user funds. This precarious legal landscape may soon shift with the introduction of a new bill in the U.S. House of Representatives aimed at safeguarding developers from unjust prosecution.

On Thursday, Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren announced their sponsorship of the Promoting Innovation in Blockchain Development Act. This legislative initiative seeks to amend a crucial section of federal law—Section 1960—which currently prohibits the operation of unlicensed money transmitting businesses. By refining the definition, the bill would restrict the law’s applicability to individuals who hold or control digital assets on behalf of others, thereby explicitly exempting developers who create, maintain, or support software platforms without ever interacting with users’ funds.

A Bipartisan Push To Protect Developers

The bill quickly garnered support from prominent crypto advocacy groups, including the Blockchain Association, which hailed it as a necessary step to foster a robust environment for U.S.-based developers to innovate. The DeFi Education Fund echoed this sentiment, emphasizing that the legislation empowers developers to construct neutral technologies domestically, free from the fear of being prosecuted as financial intermediaries.

Both the Blockchain Association and the DeFi Education Fund have long contended that existing laws have been misapplied to developers who played no active role in the utilization of their tools.

Real Prosecutions Behind The Push For Change

The urgency of this legislative effort is underscored by recent prosecutions that have shaken the developer community. Notably, the case of Tornado Cash developer Roman Storm, who was convicted in August 2025 for running an unlicensed money transmitting business, exemplifies the chilling effect such legal actions can have. Additionally, the co-founders of Samourai Wallet, Keonne Rodriguez and Will Lonergan Hill, received prison sentences of five and four years, respectively, after pleading guilty to similar charges.

In both instances, developers created tools that enabled others to transfer funds, yet did not directly hold any assets. While Storm awaits sentencing and faces additional charges, the new bill looks to the future—its provisions primarily intended to avert future prosecutions rather than retroactively affect ongoing cases.

The legislative movement doesn’t end in the House. Reports indicate that U.S. Senators Cynthia Lummis and Ron Wyden introduced a similar protective measure in January, known as the Blockchain Regulatory Certainty Act, further affirming that software development and network maintenance do not equate to money transmission under federal law.

Featured image from Unsplash, chart from TradingView



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originally published at CoinMagazine

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