U.S. Senator Lummis Endorses CLARITY Act: Will Provide "Strongest Ever" DeFi Developer Protection

On March 28, U.S. Senator Cynthia Lummis stated the latest revised CLARITY Act would provide "the strongest protection ever" for decentralized finance (DeFi) and its developers, urging swift passage of the bill. Addressing concerns from crypto lawyer Jake Chervinsky, Lummis noted Chervinsky’s belief that the current draft’s definition of "money transmitter" in Chapter 3 could still subject non-custodial software developers to regulatory oversight—undermining the legal protections originally outlined in the Blockchain Regulatory Certainty Act. Lummis emphasized recent bipartisan tweaks to relevant provisions aim to ensure non-custodial developers are not misclassified as financial institutions, thus avoiding mandatory compliance with Know Your Customer (KYC) and other regulatory requirements. Still, industry disagreements persist. Chervinsky pointed out controversy over the stablecoin yield provision has overshadowed the developer protection issue, adding "avoiding mislabeling developers as money transmitters" remains a core challenge in DeFi regulation. The bill is now expected to enter the Senate Banking Committee’s review stage in April, with its final outcome hinging on negotiations between key stakeholders over critical provisions.