If America wants to lead in crypto, it must protect the people who build it
"Crypto founders unite to protect developers, warning of offshore exodus."
Crypto industry leaders recently sent a letter to Senate leaders. America's lead in crypto is at stake. The letter urges Senate leaders not to weaken the Clarity Act's protections for software developers. The Clarity Act, which has bipartisan support, aims to provide a regulatory framework for digital assets. However, one provision is under threat: the Blockchain Regulatory Certainty Act (BRCA), which draws a bright line between software developers and money transmitters.
The BRCA is crucial because it protects software developers who write open-source code, run nodes, or help validate transactions without taking custody or control of anyone's money. Without this protection, these developers could be treated as money transmitters under federal law, which would make it impossible for them to operate in the US. This would push the people who build crypto technology offshore, forfeiting America's lead in the next era of finance.
The Senate Banking Committee advanced the Clarity Act with bipartisan support, and the bill is now poised to move to the Senate floor for a full vote. However, a filed amendment that would have gutted the BRCA provision survived the committee markup intact. The crypto industry is urging Senate leaders to keep the BRCA provision intact, without dilution, to ensure that software developers are not treated as money transmitters.
The implications of weakening the BRCA provision are significant. If software developers are treated as money transmitters, they would be subject to the same regulations as banks and financial institutions. This would make it impossible for them to operate in the US, as they would not be able to comply with the regulatory requirements. The result would be an exodus of crypto developers to other countries, such as Singapore and Abu Dhabi, where the regulatory environment is more favorable.
The numbers already show a decline in the US share of the world's open-source crypto developers. In 2015, the US had 38% of the world's open-source crypto developers, but this number has fallen to roughly 19% in the latest annual count. Every one of these developers represents jobs, tax revenue, and technology that benefits everyone. If the US continues to push crypto developers offshore, it will lose its lead in the industry and forfeit the economic benefits that come with it.
Some argue that protecting software developers means going soft on crime. However, this is not the case. The BRCA does not legalize money laundering, sanctions evasion, fraud, trafficking, or terrorist financing. Anyone who actually holds customer funds remains subject to the same anti-money-laundering rules as before. Clear boundaries do not weaken enforcement; they strengthen it by separating lawful builders from bad actors.
The BRCA has never been a partisan issue. In the Senate, it is carried by Sens. Cynthia Lummis (R-WY) and Ron Wyden (D-OR). In the House, Majority Whip Tom Emmer (R-MN) and Rep. Ritchie Torres (D-NY) lead it together. This kind of agreement is rare in Washington and reflects a broader understanding that a country that protects its builders is a country that those builders choose to stay in.
The Clarity Act is the best chance in a generation to replace enforcement by surprise with durable, predictable rules. The crypto industry is urging Senate leaders to seize this opportunity and provide a clear regulatory framework for digital assets. By keeping the BRCA provision intact, the US can ensure that software developers are protected and that the country remains a leader in the crypto industry.
In conclusion, the US is at a critical juncture in its efforts to regulate the crypto industry. The Clarity Act, with its BRCA provision, offers a chance to provide a clear regulatory framework for digital assets. If the US fails to protect software developers, it will push them offshore and forfeit its lead in the industry. The implications are significant, and the US must act now to ensure that it remains a leader in the crypto industry. The fate of the Clarity Act and the BRCA provision will be decided in the coming weeks, and the outcome will have far-reaching consequences for the US crypto industry.
