Bipartisan Bill Aims to Shield DeFi Developers from Criminal Liability

A new bipartisan legislative effort is underway in the U.S. Congress to provide critical legal protections for developers building decentralized finance (DeFi) infrastructure. The initiative seeks to ensure that the creators of open-source technology are not unfairly penalized for the way their software is utilized by third parties. The Promoting Innovation in Blockchain Development Act of 2026 (PIBDA), introduced on February 26, 2026, by Representatives Scott Fitzgerald (R-WI), Ben Cline (R-VA), and Zoe Lofgren (D-CA), specifically targets the misclassification of software engineers under criminal code Section 1960. The bill proposes a clear distinction: Section 1960 should apply only to those who control customer assets and transmit funds, rather than those who simply write the code. Proponents of the bill argue that for years, blockchain innovators have been caught in the crosshairs of an aggressive regulatory approach that treats developers like criminals. By aligning the statute with the Treasury Department's long-standing regulatory interpretations, the act aims to remove the 'chilling effect' currently hindering American technological leadership in the blockchain space. This legislative push comes as traditional financial institutions increasingly announce DeFi-related initiatives, recognizing the value of permissionless and noncustodial infrastructure. As the industry evolves faster than existing regulations, advocates emphasize the need for durable policy outcomes that foster clarity and reduce uncertainty for both centralized and decentralized market participants.