Senator Ron Wyden is pressing Congress to preserve a safe-harbor provision for crypto developers as debate over the Clarity Act intensifies. The dispute centers on Section 604, also known as the Blockchain Regulatory Certainty Act (BRCA). What began as a standalone measure was later folded into the broader bill, turning it into one of the most contested parts of the current US crypto policy debate.
The provision says developers who do not hold or control customer funds should not be treated as money transmitters. Senator Cynthia Lummis introduced it earlier this year, and Wyden has been its main Senate backer. He argued that the law should target unlicensed money transmitters, not ordinary software developers who are not acting as financial intermediaries.
Opposition accelerated in June
Resistance to Section 604 rose sharply in June. Two separate coalitions sent letters raising objections to the safe-harbor language, each warning that the measure could weaken enforcement. Law enforcement groups said their core concerns had not been resolved, while a Catholic anti-human trafficking network called for a full review before the bill moves ahead.
The first letter was backed by organizations representing more than 70,000 prosecutors, sheriffs, and police officers. Signatories included the National District Attorneys Association, NAAUSA, the International Association of Chiefs of Police, and the National Sheriffs’ Association. Sent to acting US Deputy Attorney General Todd Blanche and White House crypto adviser Patrick Witt, the letter warned that broad exemptions could shield actors facilitating illicit financial flows.
A second letter came from the Alliance to End Human Trafficking, which represents Catholic nuns and advocates. Addressed to Thune and Schumer, it tied Section 604 to risks linked to human trafficking and money laundering, arguing that broad exemptions and regulatory ambiguity could make criminal proceeds harder to trace.
Backers say the rule protects software development
A sizable part of the crypto industry supports Section 604, saying it would give software developers clearer legal treatment and help keep innovation from moving overseas. Wyden also said the measure could bring the policy approach of the Department of Justice closer to that of FinCEN, the Treasury bureau responsible for anti-money laundering enforcement and suspicious transaction monitoring.
He also drew a line around the scope of the safe harbor. Developers who do not offer custody services would still fall outside the protection if they are found to be handling or using illicit funds.
Timeline tightens as Congress nears recess
Disagreement over the BRCA remains the least settled issue in the Clarity Act debate. Lawmakers are also split on whether new ethics rules are needed for public officials connected to crypto assets, with Donald Trump named among the prominent figures in that discussion. Congress is due to recess in August, and the November elections are approaching, leaving less room on the legislative calendar.