Kristin Smith Urges Senate to Protect Crypto Developers in CLARITY Act Push

Kristin Smith pushes Senate to protect crypto developers in CLARITY Act is pressing U.S. senators to keep crypto developer protections intact in the CLARITY Act, warning that lawmakers should not slap broker-and-custodian rules onto people who simply build software and maintain blockchain infrastructure.

• Developer protections are the key fight in the CLARITY Act
• Open-source developers, validators, and non-custodial wallets are in the crosshairs
• More than 60 crypto leaders and 200+ industry groups are pushing Congress
• Stablecoin disputes, election politics, and time pressure could stall the bill
• Hester Peirce says open-source code is protected speech under the First Amendment

What Smith wants the Senate to understand

Kristin Smith, CEO of the Solana Institute, made her case in a June 9 thread on X, arguing that the Senate should preserve protections for crypto developers as it reviews the CLARITY Act, a market structure bill designed to help define how crypto is regulated in the United States. In plain English, market structure legislation is supposed to answer a basic but massively important question: which parts of crypto fall under the SEC, which fall under the CFTC, and what gets treated as financial activity versus software development.

Smith’s message was simple: open-source developers, validators, and non-custodial wallet providers are not taking custody of user funds or executing trades on anyone’s behalf, so they should not be regulated like brokers or custodians.

That distinction sounds obvious to anyone who has actually looked at how decentralized systems work, but Washington has a habit of turning obvious things into regulatory soup. A developer writing code is not the same thing as a bank holding your money. A validator helping secure a network is not a brokerage desk. A non-custodial wallet — meaning a wallet where the user controls the private keys, not a company — is not a financial middleman just because it helps people interact with blockchain networks.

If lawmakers blur those lines, they risk creating a legal mess that punishes the builders while the scammers keep doing what scammers do best: extracting money, lying with confidence, and pretending compliance is for other people.

Broad industry backing, but not much time

Smith’s push is backed by a sizeable chunk of the crypto industry. More than 60 crypto founders and executives reportedly signed a letter supporting developer protections, including Solana co-founder Anatoly Yakovenko. Separately, more than 200 crypto companies and organizations sent another letter urging the Senate to move the CLARITY Act forward without delay. Stand With Crypto has also been involved in pushing that message, which is basically the industry’s way of saying: the clock is not your friend here.

“the bill has a realistic chance of advancing through the Senate”

Smith said the bill still has momentum, noting that “the bill has a realistic chance of advancing through the Senate.” But that optimism comes with a big asterisk. The August recess is approaching, the legislative calendar is packed, and election-year politics have a way of turning “soon” into “maybe next session.”

There are also unresolved stablecoin yield issues hanging over the debate. In crypto policy, that’s not a minor side quest — it can be the kind of thing that quietly kills a broader bill. Add in competing priorities, campaign season noise, and the usual congressional procrastination, and the path forward starts looking less like a clean runway and more like a pothole-riddled alley behind a bar.

Why developer protections matter

The core issue is custody. If a company controls user assets, it starts looking a lot like a financial intermediary. If a developer writes open-source code that others use, that’s a different beast entirely. The CLARITY Act debate is really about whether Congress can tell the difference.

Smith argued that open-source developers, validators, and non-custodial wallet providers “do not take custody of user assets or execute transactions on behalf of customers,” and therefore “should not face the same regulatory treatment as brokers or custodians.”

open-source developers, validators, and non-custodial wallet providers “do not take custody of user assets or execute transactions on behalf of customers”

they “should not face the same regulatory treatment as brokers or custodians”

That’s not a request for a free pass. It’s a request for legal sanity. Regulators should absolutely go after fraud, theft, market manipulation, and custodial abuse. But if the U.S. starts treating people who publish software like they’re running a financial firm, then the message to builders is clear: go innovate somewhere less absurd.

And yes, bad actors will always try to hide behind technical language. That is a real concern. The answer, though, is not to torch the distinction between builders and intermediaries. The answer is tighter drafting that protects genuine open-source work without handing scammers a convenient disguise.

The Blockchain Regulatory Certainty Act is the other big piece

Smith pointed to the Blockchain Regulatory Certainty Act, a bipartisan bill introduced in January by Senators Cynthia Lummis and Ron Wyden, as an important companion to the CLARITY Act. She said it would provide “legal certainty for software developers and blockchain infrastructure providers.”

the Blockchain Regulatory Certainty Act would provide “legal certainty for software developers and blockchain infrastructure providers”

Its language aims to stop non-custodial developers from being classified as money transmitters “solely because they publish software code or maintain network infrastructure.” That matters because “money transmitter” status can bring heavy compliance burdens, licensing requirements, and all the administrative sludge that open-source projects were never built to handle.

prevent non-custodial developers from being classified as money transmitters “solely because they publish software code or maintain network infrastructure”

For blockchain infrastructure providers, that kind of legal certainty is not a luxury. It’s the difference between building in the open and building under constant fear of getting hit with a rulebook meant for a totally different business model.

If the U.S. wants to keep serious crypto and blockchain development onshore, it needs laws that understand the difference between software and custody. Otherwise, innovation gets shoved offshore, talent goes where the rules are less incoherent, and the country that loves bragging about innovation ends up exporting it.

The bigger legislative pileup

The CLARITY Act is not moving in a vacuum. The House Ways and Means Committee is also reviewing seven crypto tax proposals covering stablecoins, staking, mining, lending, charitable donations, wash-sale rules, and disclosure requirements. That tells you everything you need to know about how messy this whole policy cycle is: Congress is trying to rewrite multiple parts of the crypto rulebook at once while also arguing about what the rulebook should even be for.

That kind of overlap matters because it eats time. It also creates competing incentives. One committee is looking at how crypto should be taxed, another is looking at how it should be regulated, and the Senate still has to figure out whether any of it can move before the political calendar slams shut.

Crypto policy in Washington often looks like a group project where nobody agrees on the assignment, nobody read the instructions, and everyone is somehow shocked that the final draft is a disaster.

Analysts are getting less confident

Market watchers are clearly sensing the squeeze. Galaxy Digital analyst Alex Thorn cut his estimate of the bill becoming law in 2026 to 60%, down from 75% in May. JPMorgan also warned that the CLARITY Act may run out of time because of unresolved stablecoin yield issues and the approach of midterm elections.

That is a meaningful shift in sentiment. It doesn’t mean the bill is dead. It does mean the odds are tighter than they were a few weeks ago, and the industry knows it. When the biggest names in crypto policy and Wall Street start talking about timing risk, that usually means Congress is doing what Congress does best: moving slowly while pretending urgency is a strategy.

Hester Peirce adds legal firepower

There’s also a notable shift happening on the regulatory side. SEC Commissioner Hester Peirce, one of the most crypto-friendly voices in Washington, has argued that open-source software is protected activity under the First Amendment. Speaking at Princeton University’s IC3 Blockchain Camp, she said blockchain projects often involve “publishing open-source software,” which she described as “a protected activity under the First Amendment.”

“publishing open-source software,” which she described as “a protected activity under the First Amendment”

Peirce also said developers should not automatically be treated as financial intermediaries just because “third parties use their code.” That’s a big deal because it reinforces the idea that writing software is not the same as operating a financial platform.

developers should not automatically be treated as financial intermediaries because “third parties use their code”

Her comments also fit into a broader shift at the SEC under Chair Paul Atkins, who is steering the agency away from the enforcement-heavy posture that defined much of its crypto policy in recent years. That doesn’t mean the SEC has suddenly become a libertarian paradise. It just means there’s more room now for a distinction between code, custody, and actual financial intermediation — a distinction that should have existed from the start.

What this means for Bitcoin, crypto, and builders

For Bitcoin and the broader crypto ecosystem, this fight is about more than one bill. It’s about whether the U.S. can support decentralized infrastructure without crushing the people who build it. If Congress gets this right, the CLARITY Act could help create a cleaner framework for crypto market structure, protect open-source developers, and give non-custodial wallets and blockchain infrastructure providers room to operate without absurd legal overhang.

If Congress gets it wrong, the likely result is predictable: more uncertainty, more offshore migration, fewer U.S.-based builders, and more centralized entities left standing because only the big players can afford the compliance circus. That would be a lousy outcome for innovation, a lousy outcome for decentralization, and a very convenient outcome for incumbents who would rather keep the gate closed.

There is a real policy argument for caution here. Regulators do need tools to stop fraud and keep financial markets honest. But there is a massive difference between regulating a company that holds customer assets and regulating a developer who publishes code. Confusing those categories is how you end up punishing the builders while missing the actual villains.

Key questions and takeaways

Why is Kristin Smith pushing the Senate now?
Because the CLARITY Act still has a possible path forward, but only if lawmakers move before the August recess and before election politics choke off momentum.

Who does she want protected?
Open-source developers, validators, and non-custodial wallet providers who build or maintain blockchain infrastructure without taking custody of user funds.

Why does the crypto industry care so much?
Because sloppy definitions could drag software builders into rules meant for brokers, custodians, or money transmitters — a regulatory headache that would drive innovation out of the U.S.

What is the Blockchain Regulatory Certainty Act?
A bipartisan bill from Senators Cynthia Lummis and Ron Wyden that would give clearer legal protection to non-custodial developers and blockchain infrastructure providers.

What could derail the CLARITY Act?
Stablecoin yield disputes, election-year politics, a crowded legislative calendar, and the risk that Congress simply runs out of time.

Are the odds getting better or worse?
Worse, at least for now. Galaxy Digital lowered its outlook, and JPMorgan warned the bill may not clear the window before the political climate turns hostile.

How does the SEC factor into this?
The SEC’s posture matters because it shapes how crypto developers and projects are treated in practice. Hester Peirce and Paul Atkins are signaling a more nuanced approach than the old enforcement-first regime.

Is this about protecting builders or protecting scams?
Mostly protecting builders. Honest developers should not be swept into the same regulatory net as scammers, but lawmakers still need tight definitions so bad actors can’t hide behind “open-source” as a get-out-of-jail-free card.

The real test here is simple: can Washington regulate crypto without making a complete hash of how software works? If it can, that’s a win for Bitcoin, open-source development, privacy, and decentralization. If it can’t, expect more confusion, more capital flight, and more proof that the people writing the rules still don’t understand the tools they’re trying to control.