U.S. Senator Cynthia Lummis has said work is underway to strengthen developer safeguards in the CLARITY Act while preserving enforcement against illicit crypto activity.
Summary
- Senator Cynthia Lummis said she is working to keep protections for non money transmitting developers intact while updating the CLARITY Act.
- Lummis said changes will not limit law enforcement action against bad actors involved in illicit crypto activity.
- Senator Thom Tillis warned he may oppose the Senate bill unless ethics rules on federal crypto activity are included, according to Politico.
According to a post shared by Cynthia Lummis on X, the update focuses on protecting non-custodial developers without limiting law enforcement action.
“This isn’t a big new hurdle, and is something I’m working on now. I am committed to keeping protections for non-money transmitting developers safe without tying law enforcement’s hands to hold bad actors accountable,” Lummis wrote.
Framed as the Cryptoassets Legal Clarity and Regulatory Improvement Act, the legislation sets out to define how digital assets and blockchain participants are treated under U.S. law. Lummis has positioned developer protections at the center of the bill, shielding software creators from liability when third parties misuse open-source code, while drawing a clear line for those directly linked to criminal funds.
Clarifications under discussion address how “assistance” in illicit activity is interpreted, a point industry participants have flagged as a legal grey area. Additional provisions may also introduce safe harbor timelines for new protocol launches, giving developers space to test and deploy software without immediate regulatory exposure.
Parallel messaging from the U.S. Department of Justice has reinforced that stance. Acting Attorney General Todd Blanche has previously said that developers without involvement in criminal conduct will not face prosecution, aligning enforcement priorities toward bad actors rather than code authors.
Ethics dispute adds pressure on Senate negotiations
Progress on the Senate’s crypto market structure bill now hinges on unresolved political conditions, with Thom Tillis warning he could withdraw support if ethics provisions are excluded.
“There has to be ethics language in the bill before it leaves the Senate, or I’ll go from one of the people working on negotiating it to voting against it,” Tillis said in comments to Politico.
Support for that position has extended across party lines. Senator Ruben Gallego told Politico that “there is no final bill — there is no final movement — unless there is a bipartisan agreement when it comes to the ethics provision,” tying legislative progress to agreement on conflict-of-interest rules.
Scrutiny has intensified around crypto ventures linked to Donald Trump and his family, with lawmakers such as Adam Schiff calling for restrictions on federal officials sponsoring or promoting digital assets. Schiff told Politico that negotiations have recently advanced after months of limited movement, with discussions narrowing differences across key sections.
As talks continue, the Senate proposal still needs to align with the House-passed Digital Asset Market Clarity Act, which assigns oversight roles to the Commodity Futures Trading Commission and the Securities and Exchange Commission. Committee negotiations have also been slowed by disagreements over stablecoin yield rules, where Tillis has worked with Senator Angela Alsobrooks to draft compromise language.
Banking groups have warned that yield-bearing stablecoins could pull deposits away from traditional institutions, while firms including Coinbase have argued that limiting such incentives could restrict market growth.
With ethics provisions and stablecoin terms still unresolved, bipartisan backing remains a requirement before the bill can advance to a full Senate vote.
