A recent op-ed challenges the developer protections in the CLARITY Act, sparking debate over the extent of accountability for software creators, according to a July 21 article. The critique, authored by Carole House, centers on whether powerful software systems should always have an identifiable intermediary whom the government can compel to monitor and control users.
The article argues that Section 109 of the House-passed CLARITY Act—based on the Blockchain Regulatory Certainty Act—distinguishes between those who control assets or transactions and those who merely create software. It states: “It establishes a functional test, where a developer qualifies as non-controlling only when, in the regular course of business, the developer lacks the legal right or unilateral and independent ability to control, initiate on demand, or effectuate transactions involving users’ assets without another party’s approval.”
The piece emphasizes that these provisions do not grant immunity for fraud or illegal activities. It cites guidance from FinCEN stating: “the production and distribution of software, in and of itself, does not constitute acceptance and transmission of value.” The article maintains that holding developers liable solely for publishing code would suppress open-source innovation and protected expression.
Comparisons with traditional financial intermediaries such as Visa or Mastercard are addressed by noting: “A developer who publishes a self-custody wallet…does not possess comparable authority. ‘Accountability follows power’ cannot be allowed to become ‘liability follows proximity to technology.’” The discussion also draws parallels with Section 230 of U.S. law regarding online service provider liability but contends that CLARITY’s approach is conduct-based rather than status-based.
The article concludes by warning against policies requiring all systems to have controllable intermediaries capable of monitoring users. It states: “Anyone who believes in an open society and liberal values should resist calls for forced reintermediation and pervasive surveillance.”
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