The Senate Banking Committee has unveiled an updated draft of the CLARITY Act that could provide significant legal protection for cryptocurrency developers, including retroactive immunity from certain criminal charges. The new version proposes to modify 18 U.S. Code § 1960(a), limiting liability for operating unlicensed money
transmitting businesses to only those developers who “knowingly exercise control over currency, funds, or other value that substitutes for currency.”
A key feature of the draft legislation is its retroactive application, as outlined in Section 501 under “Protecting Software Developers and Software Innovation.” This provision could have meaningful
implications for cases like that of Roman Storm, the Tornado Cash developer recently convicted of operating an unlicensed money transmitting business. Storm, who has indicated plans to appeal his verdict according to reporter Eleanor Terrett, could potentially benefit from these new protections if the bill becomes law.
The legislation’s retroactive clause comes too late for the Samourai Wallet Developers, who accepted a plea agreement in July for similar charges. However, the draft introduces additional safeguards for developers of non-custodial cryptocurrency technology under 31 U.S. Code § 5330, also with retroactive effect.
The bill specifically defines “non-controlling” developers as those creating or working on distributed ledger services that do not maintain unilateral control over user transactions or assets. This protection extends to developers of crypto services, software, and hardware designed to facilitate self-custody and digital asset security.
The Senate Banking Committee has emphasized that this latest draft incorporates feedback from extensive industry consultation, with hundreds of stakeholders contributing through a Request for
Information (RFI) process following the July discussion draft. Committee leadership, including Chairman Scott and Senator Cynthia Lummis, have expressed their commitment to continuing bipartisan efforts to craft legislation that balances investor protection with innovation in the digital finance sector.
A committee spokesperson told Bitcoin Magazine that their goal remains to “deliver a final product that will protect investors, foster innovation, and keep the future of digital finance anchored in America.” This latest version reflects the ongoing dialogue between lawmakers and the cryptocurrency industry, as they work to establish clearer regulatory frameworks for digital asset development and innovation.
The bill’s provisions represent a significant shift in the regulatory approach to cryptocurrency development, potentially offering developers greater legal certainty while maintaining oversight of actual financial control and transmission. The retroactive protections could reshape existing legal cases and set new precedents for how cryptocurrency development is treated under U.S. law.
Congress resumed its session in September 2025, with the Senate Banking Committee maintaining CLARITY as a priority initiative. However, as of now, no formal hearings on the bill have been scheduled on the committee’s calendar. The progression of this legislation could significantly impact the future of cryptocurrency development and innovation in the United States, particularly in how it balances regulatory compliance with technological advancement.
This development marks a potential turning point in the relationship between cryptocurrency developers and regulatory authorities, suggesting a more nuanced approach to oversight that distinguishes between software development and actual financial services provision.