H.R. 3633, the Digital Asset Market Clarity Act of 2025, presents a serious threat to the decentralized structure of the Lightning Network. While marketed as a bill to provide regulatory certainty for digital assets, its definition of a “Digital Commodity Broker” captures any Lightning node that earns routing fees—even in trivial amounts. This subjects small operators and hobbyists to burdensome CFTC registration, AML/KYC requirements, capital controls, and custodial segregation standards.

The only legal escape is to disable fees entirely, but zero-fee nodes quickly become unbalanced and unusable, undermining their ability to participate in routing. As a result, the bill effectively forces reliable routing into the hands of large, centralized custodians who can absorb compliance costs—excluding grassroots operators and degrading the network’s decentralization, privacy, and resilience.

LNBits operators, who provide lightweight custodial Lightning wallets for public use, are especially vulnerable under the Act. Without a carve-out for small-scale or hobbyist services, the bill threatens to shut down community-run Lightning infrastructure and replace it with heavily regulated, centralized hubs.

H.R. 3633 is not neutral legislation—it’s a structural attack on Lightning’s open, peer-to-peer fabric. Without amendments to protect small operators, it risks centralizing the future of Bitcoin payments in the hands of a few gatekeepers.