Solana Institute CEO Kristin Smith pushed the U.S. Senate this week to keep developer protections in the CLARITY Act, arguing that open-source builders should not be regulated as financial intermediaries.
The core of the argument
Smith told senators that treating open-source developers as money transmitters or brokers would stifle innovation. The CLARITY Act, she said, must preserve a clear line between writing code and handling user funds. Open-source creators build tools that others can use for transactions, but they don't control those transactions or hold custody, she argued. Regulating them as if they did, Smith warned, would drive development offshore and chill the growth of decentralized networks.
What the CLARITY Act covers
The bill, formally the Crypto Legal and Regulatory Integrity and Transparency Act, aims to bring digital assets under a coherent federal framework. A key piece of that framework is how it treats software developers. The version under Senate consideration includes provisions that could, in Smith's view, inadvertently sweep in people who merely write code for public use. She urged lawmakers to narrow the definition of a financial intermediary so it doesn't catch builders who have no control over how their software is used.
Why developer protections matter
Open-source development is the backbone of blockchain technology. Projects like Bitcoin, Ethereum, and Solana rely on volunteer and company-backed developers who release code to the public. If those developers face the same compliance burdens as banks or exchanges, many won't participate. Smith pointed out that the U.S. has a chance to lead in this space, but only if it doesn't regulate coding as a financial activity. The Solana Institute, a policy group focused on decentralized technology, has made this a top lobbying priority.
The Senate's next move
Smith's testimony comes as the Senate Banking Committee works through amendments to the CLARITY Act. Lawmakers are weighing input from industry, consumer advocates, and regulators. Whether they'll adopt her recommendation remains an open question. The committee is expected to vote on the bill later this session.
