Criticism Mounts Against DOJ’s Crypto Policy as Senators Raise Concerns Over Impact on Innovation
Two United States senators have voiced their disapproval of the Department of Justice’s (DOJ) recent interpretation of “money transmission,” which extends regulatory requirements to non-custodial software. They argue that this move could have negative consequences for crypto networks and hinder financial innovation. One senator emphasized, “I’m concerned that the DOJ’s interpretation would unjustly treat software developers as criminals simply for writing and publishing code used by others.”
Senators Cynthia Lummis (R-WY) and Ron Wyden (D-OR) expressed their concerns in a letter to U.S. Attorney General Merrick Garland on May 9. They highlighted significant reservations about the DOJ’s departure from the well-established definition of “money transmission” set by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). According to the senators, the DOJ’s broad interpretation, which argues that money transmission requirements apply to non-custodial software, has been evident in two recent criminal cases.
In the first case, the U.S. Attorney’s Office in the Southern District of New York charged the co-founders of Samourai, a non-custodial bitcoin service, with conspiracy to commit money laundering and operating an unlicensed money-transmitting business. The second case involved the U.S. Attorney’s Office in the Southern District of New York filing a reply brief against the developers of Tornado Cash. They made the claim that custody is not necessary for a service to be deemed an unlicensed money transmission.
The lawmakers assert that the DOJ’s unprecedented and unlawful change in interpretation of the law has the potential to criminalize fundamental aspects of bitcoin and other crypto networks. They believe this shift also inhibits responsible financial innovation in the United States. Senator Lummis stated, “The Biden administration’s disregard for the existing interpretation of FinCEN, which has served us well for years, not only goes against the law but also undermines the entrepreneurial spirit that has made America a global economic leader.”
She continued, “Blaming wallet software for illicit finance is as absurd as holding a highway accountable for a bank robber’s getaway car. I am steadfast in my commitment to ensuring that every American has the ability to control their assets and that the emerging bitcoin and crypto asset industry can thrive legally in this country. We must protect the right to store private keys in personal wallets.”
Senator Wyden echoed these sentiments, expressing concern that the DOJ’s interpretation would unjustly label software developers as criminals for simply writing and publishing code used by others. He called this a dangerous precedent that contradicts established law and raises serious First Amendment concerns. He emphasized the need for law enforcement agencies to enforce the law against individuals who misuse digital assets while avoiding conflicting interpretations.
Senators Lummis and Wyden urged the Justice Department to follow FinCEN’s lead and focus on targeting individuals who illegally transmit digital assets rather than penalizing coders and innovators. They believe this approach will better support the growth and development of the crypto industry.
What are your thoughts on the DOJ’s “unlawful” interpretation of money transmission and its potential impact on the crypto industry? Share your opinions in the comments section below.
