A cryptocurrency developer was convicted last year for running an unlicensed money transfer company. This issue — and others like it — are now leading to one of the sharpest disagreements in Washington over how the United States plans to regulate decentralized finance.
The conviction that changed the conversation
Roman Storm, co-founder of cryptocurrency mixing platform Tornado Cash, was convicted in August 2025 on conspiracy charges related to operating an unlicensed money transfer service.
His conviction sent chills through the developer community. It also made the legal definitions buried within pending cryptocurrency legislation seem more urgent.
This backdrop now shapes a public dispute between Senator Cynthia Lummis and prominent cryptocurrency lawyer Jake Chervinsky over whether the Digital Asset Market Clarity Act — widely known as the CLARITY Act — actually protects the developers it claims to defend.
Sen. Cynthia Lummis. Image: Tom Williams/CQ Roll Call via AP file
Don’t Believe the FUD – We have been working on a bipartisan basis over the past few weeks to make changes to Title 3 that make this bill the strongest protections ever passed for DeFi and developers. We must pass the Clarity Act to get this protection. https://t.co/CMQNHuvvFv
– Senator Cynthia Lummis (@SenLummis) March 27, 2026
The Law of Clarity: What Does Chervinsky Get?
Chervinsky’s concern is specific. He argues that Title 3 of the current Senate Banking Committee draft contains money transfer language broad enough to drag developers of non-custodial software into bank secrecy law territory — meaning know-your-customer obligations and the regulatory exposure that comes with them.
His position: This outcome would effectively void the Blockchain Regulatory Certainty Act, which was specifically written to keep non-custodial builders out of that category.
But the draft also includes provisions in Title 3 that undermine the BRCA and subject all types of non-custodial software developers to “know your customer” obligations anyway.
These sections must be fixed or the bill will not work with DeFi.
If an invoice doesn’t work with DeFi, it doesn’t work at all.
— Jake Chervinsky (@jchervinsky) March 26, 2026
“The biggest challenge is ensuring that developers of non-custodial software are not misclassified as money senders,” Chervinsky said. He described the issue as non-negotiable for DeFi, and said it remains unresolved.
The tension he refers to is not small. Section 604 of the CLARITY Act includes the BRCA, which states that developers who do not own or control user funds should not be treated as financial institutions. But Chervinsky’s reading is that the other language in Title 3 creates enough ambiguity to invalidate that protection in practice.
On Friday, Loomis responded directly. Recent bipartisan revisions to Title 3 make the bill the strongest protections for DeFi developers ever put into law, she said.
“Don’t believe FUD,” she posted on X, urging supporters to support passage of the legislation.
The text is still not public
While previous drafts of the CLARITY Act have been announced, recent revisions negotiated by Cynthia Loomis They have not been fully released yet. This means that the specific changes you describe cannot be independently verified, at least at this time.
What is known: The bill is gaining momentum. Bipartisan progress on stablecoin rewards provisions has pushed it closer to the Senate Banking Committee tokenization, expected sometime in April.
Chervinsky noted that these stablecoin provisions have captured most of the public’s attention, leaving the debate over developer protection in the background despite its importance.
For developers watching closely, the risks couldn’t be clearer. The question of whether writing non-custodial software qualifies someone as a money sender is not a theoretical question.
Roman Storm found out in court. Until the text of the revised CLARITY Act is available for review, the only safeguard for the industry is the word of a senator on social media.
Featured image from Pexels, chart from TradingView
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