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The newly released draft of the CLARITY Act has drawn criticism from crypto advocates who say it fails to properly protect software developers.
Critics argue the bill allows continued prosecution of developers while expanding surveillance of users of non-custodial software.
Market commentator Ryan Adams said removing stablecoin yield provisions would signal lawmakers are prioritising bank interests over the public.
An independent report warned that the draft’s proposed developer protections fall short of shielding self-custodial wallet builders.
The draft does not clearly exempt developers from obligations under the Bank Secrecy Act, raising compliance concerns.
Provisions could extend to decentralised finance, enabling Travel Rule-style and anti-money laundering requirements on web interfaces.
Lawmakers have reportedly submitted 137 amendments ahead of the bill’s scheduled markup on January 15.
The draft includes a revised Blockchain Regulatory Certainty Act, seen as important but incomplete by industry observers.
Under the revised language, some developers may avoid being classified as money transmitters but still face criminal liability.
Senator Cynthia Lummis said the framework preserves anti-money laundering safeguards, leaving accountability risks in place for developers.
The bill also includes the Keep Your Coins Act, which supports self-custody but allows exceptions for illicit finance laws.
Observers say the approach mirrors past regulatory efforts to treat DeFi services as intermediaries.
New sections introduce oversight of distributed ledger application layers, expanding scrutiny of privacy-focused software.
Critics warn the draft increases government oversight and weakens privacy protections for users and developers.