Lawmakers introduce bill to shield blockchain developers from federal prosecution

A trio of lawmakers introduced a proposal on February 26 aimed at offering protections to financial firms and software developers. The Promoting Innovation in Blockchain Development Act of 2026, backed by Zoe Lofgren, Ben Cline, and Scott Fitzgerald, centers on federal criminal statutes that could impact people creating code for blockchain-based projects.

Section 1960 of the Federal Criminal Code is central to the bill. Businesses that handle money for clients, such as bitcoin exchanges or payment apps, are governed under this area. Only those who genuinely have direct control over another person’s digital assets would be subject to criminal prosecution under the proposed amendment.

The bill sets up a new legal category it calls “non-controlling developers.” That label would cover anyone who writes or maintains blockchain software without touching, moving, or holding a user’s crypto. Put simply, the legislation seeks to separate the people writing the code from those running financial operations.

🚨JUST IN: @RepFitzgerald (R-WI), @RepBenCline (R-VA) and @RepZoeLofgren (D-CA) have just introduced the bipartisan Promoting Innovation in Blockchain Development Act of 2026, aimed at protecting software developers from being prosecuted under criminal code Section 1960.

The…

— Eleanor Terrett (@EleanorTerrett) February 26, 2026

Recent convictions fueled calls for change

The push comes after several court cases sent shockwaves through the crypto world. Roman Storm, who helped create the privacy tool Tornado Cash, was convicted on one count of conspiring to run an unlawful money transmission business.

Keonne Rodriguez and Will Lonergan Hill, the developers of Samourai Wallet, pleaded guilty to similar charges. Rodriguez got five years in prison. Hill was handed a four-year sentence.

Those outcomes rattled programmers across the industry. The concern is simple: skilled coders will leave the nation for countries with more transparent regulations regarding blockchain activity if writing code is deemed the same as managing a financial service.

Groups backing the bill didn’t hold back in their support. The DeFi Education Fund said the legislation “makes it clear software developers who don’t take custody of or control other people’s money can build neutral technology, here at home, without worrying about being criminally prosecuted as if they are a financial intermediary.”

The group called the bill “critically important for engineers.”

The Blockchain Association called the measure a “critical step” toward keeping developers working in the United States, especially on decentralized finance projects built on open-source code.

Senate companion bill already in play

A Senate companion bill is already on the table. Senators Cynthia Lummis and Ron Wyden introduced the Blockchain Regulatory Certainty Act back in January 2026.

Lummis said that “blockchain developers who have simply written code and maintained open-source infrastructure have lived under threat of being classified as money transmitters for far too long.”

Wyden was blunter, calling the practice of forcing developers to follow exchange rules “technologically illiterate and a recipe for violating Americans’ privacy and free speech rights.”

Whether these bills, if they become law, would affect cases that are already working through the courts remains an open question. How they would fit alongside other proposed rules is also unclear.

The CLARITY Act, a broader bill dealing with digital asset market regulations, cleared the Senate Agriculture Committee in January but still has to get through the Senate Banking Committee.

“For too long, federal overreach has blurred the line between bad actors and the innovators building next-generation technology,” Cline said. “This bipartisan bill restores needed clarity by protecting developers who don’t control customer funds, while ensuring law enforcement can continue to target real criminals.”

The lawmakers sponsoring the bill say the United States faces stiff competition from other countries in the race to lead on digital technology. Their argument is that giving developers who never handle user funds a clear legal safe zone will keep more of that work happening on American soil rather than overseas.

Backers of the legislation are hoping clearer rules will give coders the confidence to build without looking over their shoulders for federal prosecutors.

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