Lummis backs stronger DeFi protections, but critics warn unclear rules could still expose developers to legal risk. As the CLARITY Act moves closer to a Senate committee review, debate around it is intensifying. Critics question whether the bill truly protects DeFi developers from legal risk. Senator Cynthia Lummis says recent bipartisan changes strengthen those protections more than critics suggest. DeFi Developer Protections Questioned as CLARITY Act Nears Progress Lummis rejected warnings that the Digital Asset Market Clarity Act could leave decentralized finance developers exposed to prosecution. In a Friday statement, she pushed back on claims from crypto lawyer Jake Chervinsky, who said the latest draft still leaves dangerous gaps for non-custodial software builders. Don't believe the FUD– we have worked on a bipartisan basis for the last few weeks to make changes to Title 3 that make this bill the strongest protection for DeFi and developers ever enacted. We have to pass the Clarity Act to get these protections. https://t.co/CMQNHuvvFv — Senator Cynthia Lummis (@SenLummis) March 27, 2026 “Don’t believe the FUD,” Lummis said. She added that bipartisan work in recent weeks revised Title 3 and would make the bill the “strongest protection for DeFi and developers ever enacted.” She also argued that passing the CLARITY Act is necessary for those protections to take effect. Chervinsky’s criticism focuses on how Title 3 defines money transmitters. He argues those definitions could still pull some non-custodial developers into legal risk, even though another section of the bill appears to shield them. In his view, that conflict remains unresolved. Section 604 of the CLARITY Act includes language from the Blockchain Regulatory Certainty Act, or BRCA. That section says non-controlling developers and providers of non-custodial software should not be treated as financial institutions under Bank Secrecy Act know-your-customer rules. Still, Chervinsky argues that protection may not go far enough if the money transmitter language elsewhere in the bill stays too broad.  “The biggest challenge is ensuring non-custodial software developers aren’t misclassified as money transmitters. That’s non-negotiable for DeFi, and it’s still unsettled.” Chervinsky said. Lawmakers Prioritize Stablecoins as DeFi Questions Remain Unresolved Attention on that dispute has been partly drowned out by another fight over stablecoin yield and rewards provisions in the same bill. Chervinsky said those DeFi-related issues have been overshadowed during the recent debate in Washington. Recent enforcement actions have heightened the urgency of the debate. U.S. authorities have pursued multiple cases against crypto developers in recent months. One of the most notable cases involved Roman Storm, who was found guilty of running an unlicensed money-transmitting business. Lawmakers say the CLARITY Act may move forward soon, with a Senate committee review expected in April. However, updates related to DeFi have not been released yet.  The post Lummis Rebuts Criticism, Calls CLARITY Act ‘Strongest Protection’ for DeFi appeared first on Live Bitcoin News.

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