Lummis Warns CLARITY Act Failure Risks Developer Prosecution

Senator Cynthia Lummis warned that failure to pass the CLARITY Act in the current legislative session would expose software developers to criminal prosecution simply for publishing code. She described the outcome as a “regulatory dark age,” a direct attack on the SEC’s enforcement-first approach to digital assets. The warning reframes the debate around crypto regulation from a compliance cost question to a personal legal risk for individual developers.

The simple read is that Lummis is lobbying for a bill she co-sponsored. The better market read is that the CLARITY Act would codify a safe harbor for open-source code publication, removing the threat of SEC charges under securities laws for developers who do not control or profit from a protocol. Without that safe harbor, any U.S.-based developer contributing to a DeFi protocol or smart contract platform could face criminal prosecution if the SEC or DOJ later deems the code an unregistered security offering. That is not a theoretical risk. The SEC has already brought enforcement actions against individual developers in cases like LBRY and Uniswap-related probes, and the DOJ has pursued criminal charges in the Tornado Cash case.

Lummis Warning on Developer Criminal Risk

The Senator framed the warning around the current legislative window. The CLARITY Act has been introduced but has not advanced to a floor vote. If it stalls, the regulatory vacuum persists, and the SEC continues to define policy through enforcement actions rather than formal rulemaking. Lummis argued that this approach chills innovation because developers cannot know whether their code will trigger liability until after a lawsuit or indictment. The “regulatory dark age” label captures the risk that the U.S. loses its lead in open-source blockchain development as talent and projects relocate to jurisdictions with clearer legal protections.

Exposure: US-Based Crypto Developers

The primary exposure is to any software developer contributing to open-source blockchain projects while residing in the United States. That includes developers working on Ethereum, Solana, Bitcoin layer-2 solutions, and DeFi protocols. The risk extends to contributors who write code for governance, smart contracts, or wallet infrastructure. Even developers who do not receive compensation face potential liability if the SEC argues that their code facilitated a securities transaction. The CLARITY Act would explicitly protect the publication of functional code, distinguishing it from the sale of securities.