Senate dispute over developer protections could slow a crypto bill

Sen. Chuck Grassley, a Republican, and Sen. Dick Durbin, a Democrat, sent a letter to Banking Committee Chair Tim Scott and Sen. Elizabeth Warren. They argue the bill’s current draft could create an enforcement gap by narrowing the ability to go after people who, in practice, run or support money-transfer schemes without the required licensing. The senators warn that such a gap could draw organized criminal groups to decentralized venues.

The dispute centers on a section that was added to the package in early January. It uses language that largely mirrors the approach in the Blockchain Regulatory Certainty Act. The goal is to spell out that writing non-custodial software and maintaining network infrastructure, by itself, does not make someone a “money transmitter,” as long as they do not hold or control users’ funds.

Judiciary Committee leaders insist they were not involved in drafting those changes. Grassley and Durbin are asking the Banking Committee to drop any wording that, in their view, would limit investigative tools.

In the letter, the senators also point out that criminals already use plenty of tactics to blur the trail of transfers. If the bill further narrows liability, they say, proving intent and identifying organizers on DeFi platforms could become even harder, and some investigations risk being frozen permanently.

The clash is playing out alongside broader fights over the Senate’s market-structure proposal for crypto. In recent days, debates have intensified over how the bill would treat so-called stablecoin balance “rewards” and over changes that critics link to expanded financial surveillance and potential transaction freezes.

The package is moving through both the Banking and Agriculture committees, since it is meant to draw clearer lines between the SEC’s and the CFTC’s authority. But the timeline is slipping: recent reports that talks were postponed after criticism from Coinbase added another layer of uncertainty. Even if the “Republican” package reaches the Senate floor, it will need at least 60 votes, meaning it is unlikely to pass without support from some Democrats.