Section 604 Removal Could Subject Non-Custodial Developers to Bank Secrecy Act, Industry Warns

According to Odaily, the U.S. House-passed CLARITY Act (Cryptocurrency Ledger Investment Transparency and Regulatory Clarity Act) remains stalled in the Senate one year later, with industry observers expecting a vote before the August recess. Industry groups Coin Center and Blockchain Association flagged Section 604 as critical for protecting open-source innovation, as it shields non-custodial blockchain developers, node operators, and validators from being classified as federal money transmitters.

Removing Section 604 could blur the line between software development and financial services, potentially subjecting developers to Bank Secrecy Act compliance and raising First Amendment concerns, according to Stefan Muehlbauer, CertiK's U.S. government affairs lead. The bill also addresses accounting standards, recognizing the SEC's rescission of staff accounting bulletin SAB 121 and restricting the SEC from reimposing equivalent crypto custody accounting requirements without full notice-and-comment procedures.