Congress Aims 'No-Custody, No Crime' Bill at DeFi Devs, Finally Reads the Whitepaper

A bipartisan squad of three Representatives—Scott Fitzgerald (R-WI), Ben Cline (R-VA), and Zoe Lofgren (D-CA)—rolled out the Promoting Innovation in Blockchain Development Act this Thursday. The proposed fix aims to adjust U.S. Code 1960, the legal bludgeon favored by both the Biden and Trump administrations for charging crypto builders, so it only smacks down those who actually have their hands on the keys.

The catalyst for this legislative patch? Last year, a Manhattan jury decided an Ethereum dev was guilty for crafting the privacy mixer Tornado Cash, brushing aside his defense that the code was decentralized and he never touched a user's coin. Not long after, the creators behind the Bitcoin wallet Samourai Wallet folded and pleaded guilty under the same statute, now enjoying federal hospitality.

The DeFi Education Fund cheered the new bill as a potential get-out-of-jail-free card for engineers, arguing it finally draws a line: devs who don't take custody or control of other people's digital treasure can build "neutral technology" without constantly looking over their shoulder for money-transmitter charges. It's about time someone in D.C. understood that writing code isn't the same as running a vault.

This new proposal isn't a direct lifeboat for the stalled crypto market-structure bill (often called the Clarity Act), but its architects expect it to crib some of the same phrasing—formally labeling "non-controlling developers" as exempt from money-transmitter rules—without having to rewrite the entire legal canon. Think of it as a surgical fork, not a hard reset.

Treasury Secretary Scott Bessent countered that trying to regulate crypto in the U.S. without the broader market-structure bill is "impossible," dismissing any "nihilist" view that prefers no rules over sensible ones as "unacceptable." It's the classic regulatory dilemma: build the plane while flying it, or just let the degens fly totally blind.

The precise language for DeFi in the larger bill is still as volatile as a memecoin, as lawmakers and industry folks try to revive the package after months of delays. While the DeFi definitions alone probably won't tank it, other explosive issues include a tug-of-war between the banking lobby and crypto over who gets to profit from stablecoins, and a partisan stalemate on conflict-of-interest rules linked to former President Trump's crypto adventures.

Senators from both aisles have also made it abundantly clear they won't let the bill be associated with the ghost of Sam Bankman‑Fried; his proxy-posted endorsement was swiftly shot down by Republican Sen. Cynthia Lummis and Democrat Sen. Elizabeth Warren. Even in politics, some brands are too toxic to touch.

With the spring legislative slog approaching and midterm elections on the radar, lawmakers are pushing for quick action. Otherwise, this bill risks getting rekt in the congressional backlog, becoming just another promise buried in the governance queue.