There’s a new DeFi bill in Congress: what does that mean for the crypto market structure?

A bipartisan group of lawmakers introduced a bill Thursday that would exempt certain decentralized software developers from criminal liability.

With the stalled crypto market structure bill poised to include similar language, what does the bill’s introduction mean for the state of privacy-focused crypto law in Washington?

The new bill goes further than similar wording currently being debated in the market structure legislation – but should not be taken as an indication that the market structure bill’s language on developer protection is too weak, nor that the market structure bill itself is doomed to failure, according to a source familiar with the thinking behind the new bill. Declutter.

The new bill, called the Promoting Innovation in Blockchain Development Act, would formally change the language of a U.S. criminal law that has been successfully used — by both Joe Biden’s administration and the current Donald Trump administration — to prosecute crypto software developers.

The statue, US Code 1960, defines an illegal money transmission company. Current legislation would amend the code to ensure that it only applies to individuals who “exercise control over the currency.” It was introduced in the House today by Reps. Scott Fitzgerald (R-WI), Ben Cline (R-VA), and Zoe Lofgren (D-CA).

Last year, an Ethereum software developer was found guilty by a Manhattan jury for violating Code 1960 for developing a crypto privacy tool called Tornado Cash. The developer argued that because the software was decentralized and he did not take custody of user funds, he should not be considered the operator of an illegal money transmission company.

A few months later, Trump’s Justice Department received confirmation guilty pleadings under code 1960 from two Bitcoin software developers who created a similar platform called Samourai Wallet. The developers are both currently serving their sentences federal prison.

“This bill is critical for engineers,” the DeFi Education Fund, an industry advocacy group, said today of the Promoting Innovation in Blockchain Development Act.

“It makes clear that software developers who don’t take custody of others’ money can build neutral technology right here at home, without worrying about criminal charges as if they were a financial intermediary,” the group said.

The crypto market structure bill will likely include the 1960 language address code, but no language that actually rewrites the statute itself. Instead, the language would provide that “non-controlling developers” should not be treated as engaged in sending money under Code 1960.

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However, the bill’s language on decentralized finance, or DeFi, is currently in relative flux as lawmakers and industry stakeholders attempt to salvage the legislation after months of delays. DeFi refers to the collection of financial applications that exist natively on blockchain networks, bypassing the need for third-party intermediaries such as banks.

However, while the DeFi language in the bill has not yet been finalized, it is unlikely that this will be the hill on which the bill will die, sources familiar with the matter said. Declutter. Industry leaders and the banking lobby are currently embroiled in another dispute over this issue stablecoin rewardswhile Democrats in the Senate and the White House remain at an impasse over conflict-of-interest language and the numerous crypto companies.

Lawmakers did that urged that the bill must make significant progress in the coming weeks or risk falling by the wayside when Congress grinds to a halt in the spring ahead of the November midterms.