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DeFi and self‑custody draw sharp focus; witnesses call for tailored KYC/AML rules and clearer DeFi definitions
Summary
Members and witnesses debated how the Clarity Act treats decentralized finance and the right to self‑custody, balancing innovation protections against AML and sanctions enforcement concerns.
Members and witnesses spent a sustained portion of the hearing debating whether and how the Clarity Act should treat decentralized finance and noncustodial developers. Catherine Manarek, chief legal officer at Uniswap Labs, urged the committee to preserve legal certainty for developers who never take user funds and to enshrine protections for noncustodial software. "Companies for decades and decades, but now much more recently, software developers who never take custody or control of user assets have always been outside of the regime," Manarek testified, arguing that codifying that principle would protect builders.
Several members pressed…
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