Crypto Industry Urges Congress to Clarify Money Transmitter laws
More than 30 crypto companies,spearheaded by the DeFi Education Fund,are calling on congress to address the Department of Justice’s (DOJ) interpretation of money transmitter laws. They argue this could unfairly target non-custodial software developers.
In a letter to key lawmakers, the industry claims the DOJ’s stance on section 1960 deviates from existing treasury Department guidelines. This section, introduced in an August 2023 indictment, could expose developers to criminal liability.
Signatories, including Coinbase and Kraken, say the DOJ’s interpretation ignores the Financial Crimes Enforcement Network’s (FinCEN) 2019 guidelines. These guidelines state that developers who don’t hold user funds are not money transmitters.
The letter warns, “The DOJ’s new policy creates confusion and could criminalize every blockchain developer.”
section 1960 of the U.S. Code criminalizes unlicensed money transmitting businesses. Crypto firms argue it should only apply to custodial services that hold and transfer user funds.
Historically, courts have followed FinCEN’s regulations. However, the DOJ’s recent actions, like those against Tornado Cash developers, suggest a broader interpretation.
Unless Congress intervenes,U.S. crypto innovation could suffer, pushing developers overseas.The letter urges Congress to clarify Section 1960 and correct the DOJ’s misapplication of the law.
