U.S. Senator Cynthia Lummis has publicly defended the CLARITY Act, calling it the strongest legal shield yet for decentralized finance (DeFi) developers. She pushed back against concerns that the bill could expose builders to legal risks, noting that recent bipartisan updates to Title 3 address those issues. However, with the revised draft still unreleased, debate continues.
Title 3 Sparks DeFi Community Worries
Analyst Jake Chervinsky acknowledged Lummis’ support but flagged Title 3’s illicit finance provisions as a potential “non-negotiable point” for DeFi. He warned that non-custodial developers—who do not control user funds—could still be classified as money transmitters, forcing them to comply with KYC requirements. Such misclassification, he argued, would be detrimental to the DeFi ecosystem.
Lummis countered that the bipartisan updates to Title 3 already reinforce protections, ensuring non-custodial builders are not burdened with unnecessary compliance. She urged industry support and criticized Chervinsky’s interpretation as overly pessimistic.
Tension with Existing Framework
A key point of tension is how the CLARITY Act aligns with the Blockchain Regulatory Certainty Act (BRCA), introduced by Lummis and Senator Ron Wyden. The BRCA clarifies that developers and infrastructure providers without asset control should not fall under financial institution rules. New language in the CLARITY Act may undermine these safeguards, creating legal uncertainty.
“The biggest challenge is ensuring non-custodial software developers aren’t misclassified as money transmitters.” — Chervinsky
Legal Precedent Adds Urgency
Recent legal actions, including the 2025 conviction of Roman Storm, highlight how developers can face liability tied to software usage, intensifying calls for clearer boundaries. The Senate Banking Committee’s markup session has been postponed to allow further negotiations. Disagreements over stablecoin provisions—particularly those affecting bank deposits—further complicate the bill’s path.
Sources say the CLARITY Act remains under active negotiation, with no final version yet. The DeFi community is watching closely to see if Lummis can deliver on her promise of “strongest protections.”