Headline: Hyperliquid sounds alarm on CLARITY Act — DeFi developers could still face KYC risk as Senate prepares markup A fresh flare-up over the CLARITY Act has exposed continuing friction between DeFi advocates and lawmakers as a potential Senate Banking Committee markup approaches. The dispute intensified after reports surfaced that negotiators might include a broad ban on platforms offering yield on stablecoins or assets that function like bank deposits — a move that has drawn criticism from industry figures and some members of Congress. Jake Chervinsky, CEO of the newly launched Hyperliquid Policy Center (HPC), pushed back on social media, arguing the public debate has focused too narrowly on stablecoin yield. His bigger worry: the bill could still be interpreted in ways that treat non‑custodial software developers as money transmitters and subject them to KYC obligations — a change he says would be “non‑negotiable for DeFi.” Chervinsky urged fixes to parts of the bill he believes would undermine protections for developers. At the center of the dispute is the Blockchain Regulatory Certainty Act (BRCA), listed as Section 604 in the most recent Senate Banking draft. The BRCA explicitly states that “non‑controlling developers and providers” are not financial institutions required to meet know‑your‑customer rules under the Bank Secrecy Act — language designed to shield many DeFi builders from heavy regulatory burden. But Chervinsky warns that other sections of the CLARITY Act, particularly parts of Title 3, still include wording that could leave non‑custodial developers exposed to KYC duties despite the BRCA’s carveout. “Those sections must be fixed or the bill doesn’t work for DeFi,” he wrote. “If the bill doesn’t work for DeFi, it doesn’t work at all.” Senator Cynthia Lummis, a GOP lead negotiator on the bill, responded directly, telling Chervinsky not to “believe the FUD” and asserting that negotiators have been revising Title 3 to deliver “the strongest protection for DeFi and developers ever enacted.” Chervinsky acknowledged broad agreement on the need to protect developers, noting that the public draft already includes meaningful safeguards in the BRCA and in Sections 207 and 601 — while still flagging unresolved language that needs clarification. The timeframe for a formal Senate Banking Committee markup remains uncertain. The Agriculture Committee approved its section of the measure in January, but the banking panel has not yet set a date for its markup, leaving the final shape of the bill and its DeFi protections unresolved for now. Market note: decentralized exchange Hyperliquid’s native token, HYPE, was trading around $38.50 at the time of reporting, down about 1.6% over 24 hours but up roughly 33% on the month — outpacing the largest cryptocurrencies over the same period. Why it matters: how Title 3 is worded will determine whether non‑custodial DeFi developers keep legal clarity and relative freedom from KYC obligations — or whether regulatory ambiguity forces projects toward custodial, centralized designs or shuts out builders altogether. With bipartisan negotiators signaling work remains, the coming weeks will be critical for the future of DeFi-friendly language in U.S. law. Read more AI-generated news on: undefined/news