Protecting developers or weakening regulation? Section 604 of the Clarity Act faces strong opposition from the Judiciary Committee.

According to Mars Finance, on January 17th, the Senate Judiciary Committee chairpersons stated in a letter to the Senate Banking Committee that the "Blockchain Regulatory Certainty Act" would weaken federal regulations on money transfers and should not be included in crypto market structure legislation. Judiciary Committee Republican Chairman Chuck Grassley and Ranking Democrat Dick Durbin wrote in the letter that Section 604 of the Banking Committee's Market Structure Act—aimed at protecting software developers from criminal liability for third-party misuse of their products—would "weaken" federal law regarding unlicensed money transfer businesses. "The Senate Judiciary Committee (which has jurisdiction over Title 18 of the United States Code) was not consulted or given an opportunity for prior substantive consideration of the proposed changes." The letter cited the Justice Department's lawsuit against Tornado Cash developer Roman Storm, stating that the case demonstrated the plaintiffs' strong argument for the importance of holding related unlicensed money transfer businesses accountable under current regulations. This letter is another blow to the Market Structure Act, which the Senate Banking Committee was scheduled to debate and vote on on Thursday, but canceled the proceedings Wednesday evening after facing increasing opposition. If this provision remains in the bill, the Judiciary Committee (responsible for handling legal matters) will need to act as a third committee to sign off on the overall proposal, a latest point of contention that could further complicate the legislative process. DeFi advocates insist they might withdraw their support if these specific protective provisions are missing, foreshadowing another difficult impasse. The letter emphasizes: "Therefore, we urge the committee to reject any proposed provisions, including Section 604, that could weaken the government's ability to hold those responsible for unlicensed money transfers accountable."