Solana Institute CEO Kristin Smith warns the CLARITY Act's developer protection could be traded away. Galaxy Digital cuts odds to 60% as Senate clock ticks before August recess.
Alpha Score of 53 reflects moderate overall profile with moderate momentum, poor value, moderate quality, moderate sentiment.
Solana Institute CEO Kristin Smith urged the Senate on June 9 to keep developer protections in the CLARITY Act. She cited a letter from more than 60 crypto founders and executives, including Solana co-founder Anatoly Yakovenko. The letter asks senators to preserve strong protections for open-source developers, validators, and non-custodial wallet providers.
Smith argued that these entities do not take custody of user assets or execute transactions. They should not face the same regulatory treatment as brokers or custodians. Her comments came as a separate coalition of more than 200 crypto companies and organizations sent a letter urging a floor vote before the August recess.
The bill's developer clause was examined in our CLARITY Act Developer Clause Faces White House Showdown. The new risk is not the White House. It is the Senate calendar.
The mechanism is straightforward. The CLARITY Act would define which crypto activities classify as brokerage under securities law. If a developer does not handle customer funds, the bill says they are not a broker. That distinction matters for anyone publishing open-source code, running a validator node, or operating a non-custodial wallet.
Smith pointed to the Blockchain Regulatory Certainty Act, a bipartisan bill from Senators Cynthia Lummis and Ron Wyden introduced in January. That measure would prevent non-custodial software developers from being classified as money transmitters under state law. Smith wants similar language embedded in the CLARITY Act to avoid a patchwork of state-level requirements.
Legislative text released alongside the Lummis-Wyden proposal states that publishing software code or maintaining network infrastructure does not constitute money transmission. The CLARITY Act's current draft includes analogous language. Smith's worry is that Senate negotiators could trade away that language in exchange for stablecoin provisions or other compromises.
The same group is also watching the House Ways and Means Committee, which is examining seven separate crypto tax proposals covering stablecoins, staking, mining, lending, charitable donations, wash-sale rules, and disclosure requirements. Tax treatment and broker definitions interact. If the CLARITY Act forces developers into broker status, tax reporting obligations could follow.
The Senate has roughly six weeks of session before the August recess. Floor time must compete with appropriations, nominations, and must-pass items. If the bill does not clear the Senate by July, it likely stalls until late 2025 or 2026.
Alex Thorn, head of research at Galaxy Digital, last week lowered his estimate of the CLARITY Act becoming law in 2026 to 60%, down from 75% in May. Thorn said the bill must continue moving through the Senate before lawmakers leave for August recess. After that, election-related activity eats up floor time.
JPMorgan managing director Nikolaos Panigirtzoglou reached a similar conclusion. The bank cited unresolved disagreements around stablecoin yield provisions and the approach of midterm elections as factors that could complicate final approval.
What would confirm the bill is on track:
What would break the thesis:
Smith leads the Solana Institute, and Yakovenko is Solana's co-founder. The network's developer ecosystem depends on legal clarity for open-source builders. If the CLARITY Act fails to protect non-custodial developers, Solana (SOL) and other layer-1 networks could face an indirect headwind as builders weigh regulatory risk.
That is not a near-term catalyst for token prices. It matters for positioning. Projects that rely heavily on U.S.-based open-source contributors could find themselves navigating uncertain legal terrain if the bill stalls or weakens.
SEC Commissioner Hester Peirce reinforced the same idea at the IC3 Blockchain Camp at Princeton University. Peirce said many blockchain projects involve publishing open-source software, which she described as a protected activity under the First Amendment. Developers should not automatically be treated as financial intermediaries simply because third parties use their code.
SEC Chair Paul Atkins is reshaping the agency's approach to digital assets, promising to move away from the enforcement-heavy strategy of the previous administration. A clear congressional framework would reduce the SEC's discretion. Without one, the agency's shift in tone could prove temporary.
None of these are binary trades. The move will show up in risk premia: higher volatility on regulatory news, wider spreads for tokens tied to U.S.-based development teams, and a premium for projects that explicitly structure themselves to avoid broker classification.
Smith and the coalition are pushing for two things: a floor vote before August and no amendment that strips the developer clause. The public signals to track are Senate Banking Committee action, public co-sponsorships, and any White House statement.
If the bill gets scheduled for a markup, odds go up. If it gets deferred past July, odds drop sharply. The next six weeks are the window.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.