Promoting Innovation in Blockchain Development Act Introduced: Clarifying Criminal Code Section 1960 Liability

On February 26, 2026, Representatives Scott Fitzgerald (R-WI), Ben Cline (R-VA), and Zoe Lofgren (D-CA) introduced the bipartisan Promoting Innovation in Blockchain Development Act of 2026, legislation designed to protect software developers from inappropriate misclassification under criminal code Section 1960. The Promoting Innovation in Blockchain Development Act clarifies that Section 1960 applies only to those who control customer assets and transmit funds on their behalf, aligning the statute with congressional intent and the Treasury Department’s long-standing regulatory interpretation.

By clarifying the scope of who Section 1960 does and does not apply to, this bipartisan bill strengthens U.S. competitiveness in next generation digital infrastructure, while reinforcing national security. DEF is thankful to Representatives Scott Fitzgerald, Ben Cline, and Zoe Lofgren for their tremendous leadership in introducing this bipartisan bill and standing up for developers and American innovation. DEF urges members of Congress to support this bill, and we are happy to be a resource to any Congressional leaders looking to learn more.

To learn more about the bill, read DEF’s blog post here. In the blog, we detail the legislation’s contents, explain why it is important, and highlight prior advocacy to address the misapplication of Section 1960.

See more media links below: 

• Rep. Ben Cline (R-VA) – X Statement
• Cointelegraph – US lawmakers move to protect blockchain devs from prosecution
• Coindesk – A new bipartisan bill wants to ensure the next century of tech is written in America
• Coingape – U.S. House Introduces Bipartisan Crypto Bill To Protect Crypto Developers Amid DeFi Push Under CLARITY Act
• Cryptopolitan – Blockchain developers could finally get shield from criminal prosecution under landmark 2026 bill

SEC Speech Discusses Potential Innovation Exemption for DeFi 

On February 18, 2026, during ETHDenver, SEC Chairman Paul Atkins and SEC Commissioner Hester Pierce discussed the agency’s evolving approach to digital assets. 

During the exchange between Chair Atkins and Commissioner Pierce, Atkins explicitly stated that he would consider an innovation exemption or safe harbor for participants engaging with decentralized applications on public, permissionless blockchains. He emphasized that individual investors should have the freedom to choose between centralized intermediaries and decentralized applications for custody and trading. Chairman Atkins elaborated on what such an exemption might entail:

“Under this possible approach, the innovation exemption would limit trading volume and could provide relief from some of our rules and certain other requirements that may not be relevant in light of how this technology works […] The exemption would be temporary but would last long enough for us to consider developing new rules and amending existing rules to allow such trading to continue under appropriate conditions in the future and to enable any parties that need to do so to register.” 

You can read the discussion here. 

FATF Advances Global Oversight of Digital Assets with New Reports 

On February 13, 2026, the fifth Financial Action Task Force (FATF) Plenary meeting concluded and approved the creation of two new reports to address emerging risks and support responsible innovation in digital assets.

• The first report, “Understanding and Mitigating the Risk of Offshore Virtual Asset Service Providers (oVASPs),” will cover risks associated with the unregulated provision of offshore VASP services, how gaps and differences in regulatory and supervisory coverage are exploited by criminals, and recommend actions for governments. 

• The second report, “Targeted Report on Stablecoins and Unhosted Wallets,” will examine emerging risks associated with stablecoins and make recommendations to mitigate risks.

Both reports are expected to be published next month. DEF will continue to follow developments and provide updates on relevant content.

House Financial Services Committee Releases March Hearings Calendar

On February 19, 2026, the House Financial Services Committee (HFSC) announced its hearing schedule for March 2026, outlining the HFSC’s upcoming oversight and legislative priorities for the month.

• On March 5, the Financial Institutions Subcommittee will hold a hearing entitled “Fighting Fraud on the Front Lines: Challenges and Opportunities for Financial Institutions.” 
• Also on March 5, the Capital Markets Subcommittee will hold another hearing entitled “The Role of Self-Regulatory Organizations in U.S. Markets: Examining FINRA and the MSRB.”

DEF will monitor the hearings and share DeFi-relevant developments.

Ethereum Policy Advocacy Alliance Releases Paper “Securing Open Financial Infra for the Future”

On February 20, 2026, the Ethereum Policy Advocacy Alliance (EPAA) released a policy paper entitled “Securing Open Financial Infrastructure for the Future,” examining how open blockchain protocols are critical forms of financial infrastructure, comparable to the current foundational internet protocols that support modern digital services. The paper highlights the need for adapting regulatory frameworks to help technologies flourish, and points out a challenge for policymakers: how to mitigate consumer and market risks while preserving the openness and neutrality that drive innovation and global infrastructure development.

The paper also emphasizes that effective oversight of DeFi should focus on activities involving custody, control, or discretionary intermediation, rather than on the development of open-source software itself. Notably, the paper calls for clear safe harbors and protecting noncustodial developers and protocol contributors across the lifecycle of design, deployment, and maintenance, warning that the continuation of current legal uncertainty could stunt innovation and force development offshore. 

Read the full paper here. 

DEF’s Executive Director DiscussesDeFi on Thinking CryptoPodcast

On February 23, 2026, Amanda Tuminelli, the Executive Director & Chief Legal Officer at DEF, joined the Thinking Crypto podcast to discuss the need for balanced regulation in DeFi and broader crypto legislation. During the talk, Amanda highlighted: 

“It is really important that the market structure will also have federal preemption […] and it’s very important with money transmission laws. In particular, if you are actually a money transmitting business, you have to have a federal license and also a state license in every state that you operate in order to not be charged with a federal crime. It makes it even more important for us to make sure that the definition of money transmitting doesn’t inadvertently capture software developers who actually aren’t transmitting money, because nationwide, we want to make sure that misconception doesn’t happen.”

Listen to the full podcast here. 

DeFi Dictionary 

Revolut recently reported an extortion attempt to leak users’ sensitive KYC data. Centralized compliance regimes turn user info into high-value honeypots. Decentralized, privacy-preserving systems reduce risk instead of concentrating it. Here comes our word of the week: information honeypot.

Notable and Quotable

“Software developers are the architects of modern economic systems. They shape how money moves, how markets function and how people coordinate on a global scale. Unlike the builders of past eras, many are globally distributed and highly mobile – choosing where to work and innovate based on clarity, opportunity and regulatory environment. Open-source development allows anyone, anywhere, to contribute foundational code. That work has produced billions of lines of software that are collectively maintained and power modern commerce and coordination.”

—Kristin Smith, President of Solana Policy Institute, at CoinDesk blog “A new bipartisan bill wants to ensure the next century of tech is written in America” recognizing the Promoting Innovation in Blockchain Development Act of 2026

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