Blockchain clarity

One small facet of the Clarity Act that has not drawn a lot of attention is a provision that, if passed, would protect people who keep decentralized networks running.

Why it matters: Language recently added would defend people from being busted as money transmitters (a kind of business that always, always requires licenses, in the U.S.).

Catch up quick: Majority Whip Tom Emmer wrote the Blockchain Regulatory Certainty Act, a simple piece of legislation that made this clear, and that language just got amended into the Clarity Act, which is now before the whole House.

• In the last Congress, that language was also amended into FIT21, an earlier effort at a market structure bill that passed the House.

How it works: Blockchains transmit money, but no one has control over that money in transit, other than the sender.

• Blockchains are like nothing that has existed in commerce. They are a payments network in which many participate, but no one has control over.
• The most famous of these is Bitcoin. The people passing around payments are the often-discussed but little described Bitcoin miners.
• If I'm a Bitcoin miner and I decide what goes into a winning block that has you sending 1 bitcoin to your mom, I can't change that to 1.1 BTC or 0.9 BTC. All I can do is send it on or leave it for the next miner to send.

The fine print: The new language can be seen in Section 110 of the amended version of the legislation.

• "This is a meaningful step toward protecting developers of non-custodial, peer-to-peer technologies, while maintaining strong oversight of custodial financial institutions," multiple industry trade groups and a few key firms said in a joint statement.

Between the lines: A provision like this might have protected the developers of Tornado Cash.

What we're watching: Politico reports today that the House still wants to combine this market structure bill with stablecoin legislation, then send the Senate one big, beautiful blockchain bill.

• That sounds like a lift.