Bitcoin steadies as House bill seeks dev shield

Promoting Innovation in Blockchain Development Act 2026 shields noncustodial developers

U.S. House of Representatives lawmakers introduced the bipartisan Promoting Innovation in Blockchain Development Act of 2026 to clarify when Section 1960 money transmission liability applies, according to Cointelegraph. The measure was introduced by Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren, and it aims to limit Section 1960 exposure to actors that exercise custody or control over others’ crypto assets. Industry groups have welcomed the clarity, with the Blockchain Association described as calling the bill a critical step for software creators.

The proposal responds to concerns that prosecutions tied to privacy or self-custody tools have blurred lines between code and financial intermediation, as reported by CryptoBriefing. In practical terms, the bill seeks to distinguish open-source or noncustodial development from running a transmission business, without affecting enforcement against entities that actually move customer funds.

Who is covered: noncustodial software developers, not custodial intermediaries

As described in public summaries of the bill, noncustodial software developers and maintainers would be shielded from criminal liability under Section 1960 when they do not take custody of, or have control over, users’ assets. By contrast, custodial intermediaries, entities that hold, transfer, or otherwise control customer funds, would remain subject to existing federal requirements.

Advocacy groups argue the bill draws an important line between building neutral code and operating a money services business. “The bill makes it clear software developers who do not take custody of or control other people’s money can build neutral technology … without worrying about being criminally prosecuted as if they are a financial intermediary,” said the DeFi Education Fund (DEF), an industry advocacy organization.

Federal Section 1960 protections versus state money transmitter risks

The bill targets federal exposure under Section 1960, but developers could still face obligations under state money transmitter statutes if their activities are deemed custodial; industry coalitions continue to press for clearer federal preemption to avoid a patchwork of state rules, according to Blockworks. In other words, the federal clarification would not, by itself, neutralize all state-level licensing risks for intermediaries handling customer funds.

Open questions remain around how “custody or control” will be defined in edge cases and how guidance will be operationalized, as noted by BraveNewCoin. Observers also flag uncertainty about whether any protections would apply to previously filed cases, an issue that may hinge on final legislative text and subsequent interpretations. Until definitions are settled, the practical distinction between noncustodial tooling and activities that cross into transmission will remain a key compliance focus.

At the time of this writing, Ethereum (ETH) traded near $2,036.37, with sentiment described as bearish, 13.63% volatility labeled very high, and a 14-day RSI around 45.38, offering neutral market context that does not alter the bill’s legal analysis.