Crypto Industry Calls for Congressional Action on DOJ Interpretation of Money Transmission Laws
A coalition of 34 crypto industry organizations, including Coinbase, Kraken, and Uniswap Labs, has come together to address concerns over the Department of Justice’s (DOJ) recent interpretation of federal money transmission laws. The coalition has sent a joint letter to congressional leaders urging them to intervene in what they see as an overly expansive application of the law.
Key Points from the Letter
- The DOJ’s interpretation of 18 U.S.C. §1960 is seen as unprecedented and problematic.
- The focus is on the recent application of the law to software developers, notably in the case of Tornado Cash developer Roman Storm.
- There is a conflict between the DOJ’s interpretation and guidance from FinCEN regarding non-custodial software developers.
DOJ vs. FinCEN: Conflicting Standards
The crux of the issue lies in the definition of a “money transmitting business,” as outlined in 31 U.S.C. §5330 and 18 U.S.C. §1960. While FinCEN’s guidance exempts non-custodial software developers from the definition, the DOJ’s application of the law ignores this distinction.
- Developers of DeFi applications and non-custodial wallets could face felony prosecution under the DOJ’s interpretation.
- The lack of custody over user funds should not constitute money transmission, according to the coalition.
Call to Action
The organizations warn of a potential chilling effect on open-source development in the US if the DOJ’s stance is not revised. They call on Congress to step in and urge the DOJ to align its interpretation with Congress’s intent regarding money transmission laws.
