Senate Bill Clarifies Non-Custodial DeFi Protocols Are Not Intermediaries
The Senate substitute for the **Digital Asset Market Clarity Act** establishes a crucial distinction for decentralized finance infrastructure.
**Key Point:**
- Non-custodial protocols that execute based on predetermined, on-chain rules will not be classified as intermediaries under the new legislation
This clarification addresses a long-standing concern in the DeFi sector, where developers and protocol operators have sought regulatory certainty. The distinction matters because intermediary status typically triggers additional compliance requirements.
The move follows industry advocacy, including a letter signed by over 100 companies (including 1inch) calling for protections for developers and non-custodial providers. The industry has argued that open-source developers should not face the same regulatory treatment as custodial service providers.
The legislation aims to provide the regulatory clarity needed to keep blockchain innovation within the United States.