- Two US Senators have expressed concerns to Attorney General Garland regarding the Department of Justice’s (DOJ) interpretation of crypto regulations
- Senators Lummis and Wyden raised the issue of the potential criminalization of non-custodial crypto asset software developers
- They have urged the DOJ to align with FinCEN’s guidelines, emphasizing that non-custodial crypto services should not be classified as money transmitters
Two US senators have formally addressed their concerns over the Department of Justice’s (DOJ) interpretation of regulations surrounding non-custodial crypto asset software. Senators Cynthia Lummis and Ron Wyden wrote to Attorney General Merrick Garland, arguing that this stance could unjustly criminalize the developers of such software under current money-transmitting laws. The letter comes in the wake of a crackdown by US authorities on crypto mixing services, which runs the risk of imprisoning individuals for writing code that has been abused by third parties as well as being legitimately used.
“Grave Concerns” Over Expanding Dragnet
The crux of the issue lies in the DOJ’s broad application of the Federal prohibition on operating an unlicensed money-transmitting business, which, according to the Senators, conflicts with the definitions and intent established by Congress and the Financial Crimes Enforcement Network (FinCEN).
The Senators used the letter to outline their “grave concerns regarding the U.S. Department of Justice’s (DOJ) recent policy arguments,” which they say “dramatically expand the scope of the Federal prohibition on operating an unlicensed money transmitting business.”
Highlighting the potential ramifications of the DOJ’s interpretation, the Senators emphasized that it could inadvertently target a wide range of services beyond its intended scope. This could lead to internet and postal services being caught in the net, pointing out that such a broad interpretation misaligns with the technological and operational realities of how cryptocurrencies like Bitcoin function, where the control and ownership of assets remain clearly with the user at all times.
DOJ Should Follow FinCEN
The Senators urged the DOJ to reconsider its stance and align with FinCEN’s established guidelines on money-transmitting businesses, which exempt non-custodial crypto services from the money transmitter definition, noting, “The DOJ should not diverge from the clear, logically sound, and well-established definition of ‘money transmission’ established by FinCEN.”
This dispute underscores the ongoing debate and complexity surrounding cryptocurrency regulation in the US, reflecting broader challenges in adapting existing legal frameworks to new technological landscapes.
