The U.S. Congress adds developer protections to the CLARITY Act bill

The CLARITY Act is getting closer to passing as developer protection clauses are believed to have been included in the new draft.

This development helps reduce a major point of contention in the US crypto market structure bill, but other issues such as stablecoin yield and ethical language remain unresolved.

MAIN CONTENT

• The developer protection clause is believed to have been accepted in the new draft of the CLARITY Act.
• The controversy over classifying certain developers and node operators as “money transmitters” is being narrowed.
• The market is pricing the likelihood of the bill being signed into law this year at 69%.

Developer protection clause included in the new draft

A significant change in the CLARITY Act is the addition of a developer protection clause, which is believed to have been incorporated into the new draft. This point has been contentious because it directly relates to how US law classifies developers and operators of decentralized infrastructure.

Senator Cynthia Lummis, a strong supporter of this content, has spoken out in favor of advancing the bill. The focus of the clause is to prevent those who do not control user assets from being considered unlicensed money transmitters.

BRCA aims to narrow scope for developers and nodes

Related to this, the Blockchain Regulatory Certainty Act (BRCA) seeks to exclude decentralized applications and the operators supporting them from being classified as money transmitters. This approach is based on the principle that if developers or operators do not control user funds, they should not be grouped with money transfer businesses.

BRCA also relates to Section 1960 of US federal law, which addresses the operation of “unlicensed money transmitting businesses.” The goal of the amendment is to narrow the application of this provision to protect legitimate developers.

This move comes after a wave of industry reactions to prosecutions related to Samourai and Tornado Cash. Supporters argue that law enforcement should focus on criminals using these tools, rather than targeting the developers themselves.

Source: Senate Banking Committee (latest draft bill) However, current data does not show all issues have been resolved. If the developer protection point is finalized, remaining concerns will include stablecoin yield agreements and ethical language.

Market prices in a 69% chance of passage

Despite last-minute uncertainties, market sentiment regarding the CLARITY Act remains quite positive. Polymarket is pricing the bill’s chances of becoming law this year at 69%.

This rate has increased by 23% in May, indicating improved market expectations following recent concessions and agreements. However, an increased probability does not mean all legislative hurdles have disappeared.

Meanwhile, the banking sector has yet to fully agree with the Senate Banking Committee’s markup, scheduled for Thursday. An industry representative organization also expressed dissatisfaction with the new stablecoin yield agreement, even though rewards on idle balances have been blocked.

Source: Polymarket Patrick Witt, a crypto advisor to former President Donald Trump, also believes the bill will be further improved before Thursday’s markup. He expressed this view after the developer protection content was adjusted.

The deals will continue until CLARITY improves.
– Patrick Witt, crypto advisor to President Donald Trump

What else to watch in the CLARITY Act?

The next point to monitor is the reaction of the banking sector to the new markup, along with the possibility that remaining controversies could continue to delay legislative progress. If these issues are addressed, the bill will have a better chance to advance.

For the crypto market, the developer protection content is a notable signal because it directly relates to the legal risks of decentralized infrastructure in the US. However, the rest of the bill still depends on ongoing political and legislative negotiations in the coming days.

Summary

The CLARITY Act gains momentum as the developer protection clause is believed to have been accepted, but issues related to stablecoin yield, ethical language, and industry reactions are still unresolved.

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