Promoting Innovation in Blockchain Development Act
- Sponsor
- Rep. Fitzgerald, Scott [R-WI-5]
- Committees
- Judiciary Committee (primary)
- Last action
- Feb 26, 2026
Bottom line
The bill seeks to refine the definition of an "unlicensed money transmitting business" under federal law, potentially exempting non-custodial blockchain service providers from certain regulatory requirements and criminal penalties.
What it actually does
This bill amends Section 1960(a) of title 18, United States Code, which prohibits operating an unlicensed money transmitting business. It clarifies that this prohibition applies only to entities that "exercise control over currency, funds, or other value that substitutes for currency." This change aims to narrow the scope of the law, potentially excluding certain non-custodial blockchain participants from criminal liability.
Proponents argue
Proponents argue this amendment provides much-needed legal clarity for the blockchain industry, fostering innovation by ensuring that developers and non-custodial service providers are not inadvertently criminalized under existing money transmission laws. They contend it aligns federal law with the decentralized nature of many blockchain technologies, preventing overreach and promoting economic growth in the digital asset space.
Opponents contend
Opponents might argue that narrowing the definition of money transmitting businesses could create loopholes, potentially weakening anti-money laundering (AML) and counter-terrorist financing (CTF) efforts. They may express concerns that this amendment could allow bad actors to operate with less scrutiny, increasing risks within the financial system and making it harder to track illicit transactions involving digital assets.
The bill text is extremely short and can be read quickly, but understanding its full implications requires significant background knowledge of financial regulations and blockchain technology.
Section 2
Clarification of 'Unlicensed Money Transmitting Business' Definition
This section modifies a federal law (18 U.S.C. 1960(a)) that prohibits operating an unlicensed money transmitting business. It adds a specific condition, stating that for an entity to be considered such a business, it must "exercise control over currency, funds, or other value that substitutes for currency." This means that simply facilitating transactions without holding or controlling the actual assets would likely not fall under this criminal statute.
Supporters argue
Supporters argue this clarification is essential for distinguishing between true money transmitters, who hold customer funds, and software developers or non-custodial service providers, who merely create tools. They contend it prevents the stifling of innovation by removing the threat of criminal prosecution for activities that do not involve custody of assets, aligning the law with technological realities.
Critics contend
Critics might argue that this amendment could inadvertently create a safe harbor for certain illicit activities by making it harder to prosecute entities involved in money transmission if they structure their operations to avoid direct "control" over funds. They might contend that the current law, while broad, provides necessary flexibility for law enforcement to adapt to evolving methods of illicit finance.
Tradeoffs
The bill navigates the tension between fostering innovation in decentralized technologies and maintaining robust anti-money laundering and counter-terrorist financing frameworks. It seeks to provide legal certainty for legitimate blockchain activities while potentially shifting the burden of identifying and prosecuting illicit actors in the digital asset space.