The CLARITY Act Showdown: Why Tomorrow's Senate Vote Could Decide Whether Writing Code Is a Federal Crime

On May 14, 2026, the Senate Banking Committee will mark up the Digital Asset Market CLARITY Act. More than 100 amendments are on the table. Senator Elizabeth Warren filed over 40 of them. The American Bankers Association reportedly sent more than 8,000 letters to Senate offices in the days leading up to the vote. The fight looks like Beltway theater, but for anyone holding crypto, building in DeFi, running a stablecoin business, or operating any digital asset infrastructure, the outcome will shape your federal criminal exposure for the next decade.

This is not abstract. In August 2025, Tornado Cash developer Roman Storm was convicted of operating an unlicensed money transmitting business under 18 U.S.C. § 1960. Samourai Wallet founders Keonne Rodriguez and William Lonergan Hill pleaded guilty to the same charge and received four and five years in federal prison. None of them held customer funds. None of them controlled user wallets. They wrote code. The Department of Justice prosecuted them anyway.

The CLARITY Act, in its current form, contains a provision called the Blockchain Regulatory Certainty Act, or BRCA, that would make those prosecutions much harder to bring. Several amendments scheduled for tomorrow's vote would strip that protection out. Whether the BRCA stays in or comes out is the single most important federal criminal defense question in the crypto space right now.

The BRCA fight is about where federal criminal exposure starts for people who write code, run infrastructure, and build non-custodial digital asset tools.

What the CLARITY Act Actually Does

The Digital Asset Market CLARITY Act of 2025 cleared the House last July with bipartisan support. The Senate version is a 309-page bill that does three core things. It splits regulatory jurisdiction over digital assets between the SEC and the CFTC. It creates a federal stablecoin framework. And, critically for our clients, it includes the BRCA, which clarifies that software developers and infrastructure providers who do not custody or control user funds are not money transmitters under 18 U.S.C. § 1960.

That clarification matters because § 1960 carries up to five years per count and functions as a stacking charge in most federal crypto prosecutions. Pair it with 18 U.S.C. §§ 1956 and 1957 money laundering counts and the exposure becomes substantial. Pair it with conspiracy under 18 U.S.C. § 371 and the government can sweep in anyone tangentially connected to the protocol.

The legal fight is not over whether crypto should be regulated. It is over whether non-custodial code and infrastructure can be treated as money transmission in federal criminal cases.

Why the Bank Lobby and Senator Warren Want the BRCA Gone

Senator Jack Reed has filed an amendment to scrap the BRCA outright. Senator Warner has filed a competing amendment that would create a so-called control test to determine when operators of non-decentralized DeFi trading protocols become subject to Bank Secrecy Act anti-money laundering obligations. Warren's 40-plus amendments take aim at stablecoin yield, Federal Reserve master accounts for crypto firms, and Office of the Comptroller of the Currency guidance that has been favorable to digital asset banks.

The banking lobby's stated concern is deposit flight. If stablecoins pay interest-like rewards, the argument goes, consumers will move money out of FDIC-insured banks. The defense bar's concern is different. Without the BRCA, every line of code a developer writes, every node operator who runs software, every wallet provider who lets users hold their own keys, faces the same § 1960 exposure that put the Tornado Cash and Samourai defendants in federal prison.

The BRCA does not weaken anti-money laundering law. It does not shield bad actors. It draws a line that the Treasury Department itself drew in 2019 FinCEN guidance: only those who exercise total independent control over a customer's assets are money transmitters. The fight is over whether Congress writes that line into the criminal code or leaves it to line prosecutors to decide case by case.

The Exposure Map for Clients Right Now

Until the CLARITY Act passes in some form, federal prosecutors continue to operate under the expansive § 1960 theory used in Storm and Samourai. The conviction in Storm signaled to the DOJ that juries will accept this theory. Until something changes legislatively or in the appellate courts, anyone building or operating in this space should assume exposure on the following:

• Operating any platform, protocol, or service that touches digital assets without a documented analysis of whether it qualifies as money transmission under § 1960, FinCEN's 31 C.F.R. § 1010.100, and applicable state money services business statutes including Florida's Chapter 560.
• Receiving or routing funds connected to a hack, exploit, sanctioned address, or fraud, even at several removes from the underlying conduct, which triggers § 1956 and § 1957 money laundering exposure.
• Transacting with any wallet or address on the OFAC Specially Designated Nationals list, which can produce strict liability sanctions exposure regardless of intent.
• Operating a stablecoin yield, rewards, or referral structure that regulators or prosecutors may characterize as an unregistered securities offering or as an unlicensed deposit-taking activity.
• Developing or maintaining DeFi protocols, mixers, or privacy tools without legal cover under the BRCA or comparable safe harbor.
• Running validator, staking, or node infrastructure for proof-of-stake networks where staking rewards could be characterized as investment contracts under Howey.

Sentencing exposure in these cases is driven by 18 U.S.C. § 1960 itself, five years per count, by the money laundering statutes, twenty years per count under § 1956, and by the Sentencing Guidelines loss table at U.S.S.G. § 2B1.1, which was recently amended to incorporate inflation. The Storm and Samourai cases produced multi-year federal sentences from prosecutions that began with a single charging theory: writing code is operating a money transmitting business.

Once prosecutors adopt an expansive money transmission theory, they can layer money laundering, conspiracy, and sanctions counts on top of the same core conduct.

What the Government Is Actually Building

The Department of Justice National Cryptocurrency Enforcement Team has expanded its docket every year since it was formed. FinCEN's digital asset compliance examiners are running aggressive enforcement actions against money services businesses with weak know-your-customer programs. OFAC has continued to add blockchain addresses to its sanctions list, including wallet addresses associated with North Korean, Russian, and Iranian actors. The DOJ Fraud Division now treats crypto-adjacent fraud as a top-tier priority. The IRS Criminal Investigation Division is auditing crypto exchanges for unreported income and treating wallet activity as a primary source for parallel financial fraud investigations.

In the Middle District of Florida, which is where AMC Defense Law concentrates much of its federal practice, prosecutors have been increasingly active on crypto matters. Florida's status as a hub for fintech startups, retail crypto investors, and offshore-adjacent businesses means MDFL grand juries see crypto exposure across multiple investigation types: healthcare fraud where proceeds were converted to digital assets, wire fraud schemes routed through stablecoin transfers, and tax investigations triggered by exchange reporting.

The criminal exposure picture is being shaped by statute, agency guidance, sanctions enforcement, and the charging choices prosecutors are already making.

Mistakes Clients Make Before They Get to a Lawyer

In every crypto-adjacent investigation we have handled, the early mistakes look the same.

• Talking to federal agents, FBI, IRS-CI, or HSI without counsel present, often because the agents say they just want to ask a few questions. Those interviews become 18 U.S.C. § 1001 false statement exposure faster than clients realize.
• Producing wallet data, transaction records, or business documents in response to grand jury subpoenas, target letters, or CIDs without a litigation hold, a privilege review, or a coordinated production strategy.
• Continuing to operate the platform, protocol, or business after receiving notice of an investigation, which adds new conduct dates to any eventual indictment and undermines a good-faith reliance defense.
• Assuming the case is not serious because no one has been arrested yet. Federal crypto investigations regularly run two to three years before any indictment. By the time the indictment comes, the government has the wallets traced, the exchange records pulled, and the cooperators lined up.
• Talking to co-defendants, business partners, or developers about the investigation, which creates obstruction exposure under 18 U.S.C. § 1512 and destroys any leverage the defense might have had.

Strategic Defense and Compliance Approach

Our firm represents clients on both sides of this work. We defend federal criminal investigations and prosecutions involving digital assets, money transmission charges, BSA violations, money laundering counts, sanctions cases, and fraud schemes that touch crypto. We also help legitimate operators structure their businesses to reduce the surface area for prosecution before any enforcement action begins.

On the defense side, early intervention is the single highest-leverage move available. Crypto investigations are document-intensive and timeline-dependent. The earlier defense counsel gets involved, the more opportunity exists to shape the narrative before charging decisions are made, to push back on overbroad subpoenas, to negotiate with line prosecutors about charging theories, and to position the client for cooperation or pre-indictment resolution if that is the right path.

On the compliance side, we work with crypto businesses, DeFi developers, stablecoin issuers, and digital asset infrastructure providers to build compliance programs that match where federal regulators and prosecutors are actually looking. That means written money transmission analyses tied to FinCEN's 2019 guidance, OFAC screening procedures with documented audit trails, BSA compliance programs sized to the actual business activity, and corporate structures that draw clear lines between custodial and non-custodial functions. None of this guarantees no investigation. All of it gives the defense room to work if one comes.

Why the Timing on This Bill Matters

If the BRCA stays in the CLARITY Act and the bill passes in something close to its current form, the legal exposure picture for crypto developers changes meaningfully. Future § 1960 prosecutions against non-custodial developers become significantly harder to bring. Existing cases that have not yet been charged may be reevaluated. The DOJ's expansive interpretation of money transmission gets a legislative pushback.

If the Reed amendment passes and the BRCA gets stripped out, or if the Warner amendment adds a control test that prosecutors and FinCEN can apply elastically, the Storm and Samourai prosecutions become the template, not the outlier. Every developer, node operator, wallet provider, and DeFi protocol operator faces the same exposure those defendants faced. Federal grand juries in MDFL, SDNY, and other crypto-active districts will see more § 1960 indictments, not fewer.

The Senate Banking Committee vote on May 14 is the inflection point. Whatever happens tomorrow will be the baseline for how federal prosecutors approach crypto cases for the rest of this Congress and likely beyond.

Facing a Federal Crypto Investigation? Need Compliance Guidance Before You Build?

AMC Defense Law represents clients in federal criminal investigations involving digital assets, money transmission, money laundering, sanctions, and fraud. We also advise crypto businesses, DeFi developers, and stablecoin operators on regulatory compliance and structural decisions that reduce federal criminal exposure before enforcement begins. Our team has handled complex federal investigations involving emerging technology, financial crimes, and the intersection of digital assets with healthcare fraud, wire fraud, and tax matters.

If you have received a target letter, a grand jury subpoena, a CID from FinCEN or OFAC, or a visit from federal agents, the time to engage counsel is now, not after the indictment. If you are building in this space and want to get the compliance architecture right the first time, we can help with that too.

Contact AMC Defense Law for a confidential consultation. We practice federal criminal defense nationwide with a focus on the Middle District of Florida and other Florida federal districts.

AMC Defense Law | www.amcdefenselaw.com | Federal Criminal Defense Nationwide

When federal criminal exposure turns on code, custody, sanctions, and money transmission theories, the legal architecture matters before the indictment arrives.

DISCLAIMER: This article is for general informational purposes only and does not constitute legal advice. Reading this post does not create an attorney-client relationship. The CLARITY Act and related amendments discussed here remain pending legislation and may be modified, defeated, or signed into law in forms different from those described. If you are under investigation, facing federal charges, or operating a digital asset business that may have federal criminal or regulatory exposure, consult a licensed criminal defense attorney. Results in prior matters do not guarantee outcomes in future cases.