Blockchain Association Presses Congress To Preserve BRCA In Sweeping Crypto Market Rules
With a White House decision deadline on the much‑watched CLARITY Act looming on March 1, the fight over how the United States will regulate decentralized finance is entering a decisive phase on Capitol Hill.
On Thursday afternoon, Senate Democrats are expected to reconvene to hash out details of a broad crypto market structure package. In advance of that meeting, the Blockchain Association has launched an intensive lobbying push, urging lawmakers to keep the Blockchain Regulatory Certainty Act (BRCA) intact as they revise the bill.
Industry Mobilizes Around Title III And DeFi
The trade group, which represents a wide spectrum of digital asset firms, is concentrating its efforts on Title III of the latest draft from the Senate Banking Committee. According to the association, this section will be critical in determining how decentralized finance (DeFi) protocols and their developers are treated under U.S. law.
In a statement shared on the social platform X, the association said leaders from 18 of its member companies were on the ground in Washington, meeting with 24 Senate offices across both the Banking Committee and the Agriculture Committee. The goal: ensure that negotiations do not weaken long‑sought protections for open‑source developers and non‑custodial software.
The group stressed that the conversation is about far more than legal definitions or technical drafting. “Today’s meetings are about whether America will keep its commitment to open innovation – and to the developers who build permissionless software,” the association wrote, framing the issue as a test of the country’s broader technology policy.
Drawing A Bright Line: Custodians vs. Code Writers
At the heart of the association’s argument is a simple distinction: entities that hold and control customer assets should be regulated as financial intermediaries; those who merely write and publish software should not.
The organization emphasized that it has consistently pushed for a clear separation in law between developers of non‑custodial tools and businesses that provide custodial financial services. In its view, failing to maintain that distinction risks pushing DeFi activity either underground or offshore, undermining both consumer protection and U.S. competitiveness.
As Congress moves toward a comprehensive framework for digital asset markets, the association warns that poorly tailored rules could effectively “regulate DeFi out of existence” by treating code as if it were a financial institution. That, it argues, would not only chill innovation but also drive developers to more permissive jurisdictions.
Open‑Source Developers At The Center Of The Debate
The treatment of open‑source developers has emerged as one of the most contentious aspects of the crypto regulatory debate. The Blockchain Association maintains that individuals and teams who release code, but never take possession of user funds or manage assets on behalf of others, should not be treated as financial intermediaries.
“Open‑source developers should not be treated as financial intermediaries when they do not custody or control customer assets,” the association said, adding that the United States has a rare opportunity to become the global leader in DeFi innovation if it gets the policy framework right.
From the group’s perspective, equating software publishing with money transmission would be akin to treating printer manufacturers as publishers or holding operating system developers liable for every app built on top of their platform. Such a precedent, they argue, would reverberate far beyond crypto and touch the broader open‑source ecosystem.
Developer Protections As “Foundational” To U.S. Innovation
Summer Mersinger, the Blockchain Association’s chief executive officer, reinforced these themes in a post earlier on Thursday. She characterized legal protections for developers as “foundational” to what she described as the next wave of American innovation in finance and beyond.
As lawmakers refine the market structure bill, Mersinger argues they must draw an unmistakable boundary between organizations that actually hold and control consumer funds and those that only design, write, or publish open‑source software. Allowing that line to blur, she suggests, would expose developers to unpredictable legal risk and deter responsible experimentation.
According to the association, a healthy digital asset ecosystem requires regulators to focus on real points of custody and control – exchanges, brokers, custodians, and service providers – rather than on the underlying code that makes those systems possible.
Parallel Fight In The House: Promoting Innovation In Blockchain Development Act
The question of developer liability is not limited to the Senate. On the House side, a parallel effort is emerging to shield software creators from being swept into laws aimed at money transmitters.
On Thursday, crypto journalist Eleanor Terrett reported that Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren have introduced a bipartisan bill titled the Promoting Innovation in Blockchain Development Act of 2026. The legislation is specifically tailored to address how Section 1960 of the federal criminal code applies to blockchain activity.
Section 1960 was originally crafted to target unlicensed money transmitters – entities that accept and transmit funds or otherwise hold customer money without proper registration. The new House bill seeks to clarify that this provision should apply only to actors that actually control user assets, not to those who simply write or distribute code.
If enacted, the measure would explicitly exclude software developers who do not take custody of customer funds from being prosecuted under Section 1960. That language mirrors a key demand from the crypto and DeFi sectors, which have been pushing to embed similar protections into the CLARITY Act and related Senate proposals.
Why BRCA Matters In The Broader Regulatory Puzzle
The Blockchain Regulatory Certainty Act has become a focal point because it would codify many of these distinctions in statute. Supporters say BRCA provides a “safe harbor” for non‑custodial actors – including wallet providers, protocol developers, and infrastructure builders – as long as they do not actually take possession of user assets.
By locking those protections into law, BRCA is intended to prevent future reinterpretations by regulators or prosecutors that might attempt to treat software developers as unlicensed money transmitters or unregistered financial institutions. The Blockchain Association argues that weakening BRCA during negotiations would reintroduce uncertainty just as the industry seeks clearer rules.
Critics of broad safe harbors sometimes worry that bad actors could hide behind “just writing code” as a defense. In response, industry advocates stress that BRCA and related proposals are narrowly focused on non‑custodial activity and do not shield individuals or entities that deceive users, misrepresent services, or secretly take control of funds.
Implications For DeFi Protocols And Market Structure
For DeFi protocols, the outcome of this legislative fight will help determine whether the U.S. remains a viable base of operations. Many DeFi projects are structured so that the underlying code is open‑source, and users interact with smart contracts directly, without a central intermediary holding their assets.
If developers of such systems are classified as financial institutions simply because they wrote or deployed code, the compliance burden could become impossible to meet. That could incentivize teams to relocate, avoid serving U.S. users, or design protocols in more opaque ways to avoid perceived liability – all outcomes that run counter to regulators’ goals of transparency and oversight.
Conversely, a framework that targets actual custodians and intermediaries while leaving room for non‑custodial experimentation could steer DeFi innovation into more accountable and auditable channels. Proponents of BRCA and the House developer bill argue that this balance is essential for building robust consumer protections without smothering the technology.
The CLARITY Act Deadline And The Policy Clock
The March 1 White House deadline on the anticipated CLARITY Act adds urgency to these discussions. As the administration reviews the legislation, the final contours of how digital asset markets will be overseen in the U.S. are beginning to come into focus.
For the crypto industry, the stakes are high. A restrictive interpretation of what constitutes a “financial intermediary” could ripple through venture funding decisions, hiring, and protocol design. Startups may opt to launch in jurisdictions perceived as more predictable, while established players may limit their U.S. exposure or shift more resources offshore.
Supporters of a balanced approach argue that clear, targeted rules can have the opposite effect, drawing capital and talent into the U.S. by offering regulatory certainty. In that vision, developers know where their responsibilities begin and end, while custodial entities understand the licenses, disclosures, and safeguards they must implement.
Balancing Innovation, Consumer Protection, And National Competitiveness
The current debate reflects a broader tension in financial regulation: how to protect consumers and uphold market integrity without shutting down new technologies before their potential is understood.
Policymakers who favor stringent treatment of DeFi often point to risks such as hacks, rug pulls, and market manipulation. Industry advocates counter that many of those harms occur at the custody and interface layer – centralized exchanges, front‑end operators, and service providers – rather than within the underlying open‑source protocols.
By isolating regulatory obligations at the points where users actually relinquish control over their assets, lawmakers can, in theory, both limit systemic risk and preserve room for experimentation. The Blockchain Association argues that BRCA and the Promoting Innovation in Blockchain Development Act embody this principle by clarifying that publishing code alone is not a regulated financial service.
What Comes Next For U.S. Crypto Policy
As Senate Democrats continue to refine the crypto market structure bill and the House weighs its own proposals, the contours of future U.S. crypto policy are still fluid. Negotiations in the coming weeks will determine whether BRCA survives intact, how DeFi protocols are categorized, and whether open‑source developers receive the legal clarity they have been demanding.
For now, industry groups like the Blockchain Association are racing against the clock, seeking to ensure that the final legislative package reflects a nuanced understanding of how decentralized systems work. The outcome will not only shape the regulatory environment for Bitcoin, Ethereum, and DeFi, but also signal whether the U.S. intends to lead or lag in the next era of financial technology.
Ronaldo, a long‑time follower of the digital asset space with more than four years of experience, notes that the decisions being made now could define the trajectory of decentralized finance for the next decade. In his view, treating developers as partners in innovation rather than presumptive intermediaries may prove decisive in whether the U.S. remains at the forefront of blockchain development.