Senators Ron Wyden and Cynthia Lummis are challenging the Department of Justice’s controversial interpretation of cryptocurrency laws. They are concerned about the treatment of crypto software services, such as Samourai Wallet and Tornado Cash, as unlicensed money transmitters, which they believe exceeds legal boundaries.
In a letter to Attorney General Merrick Garland, Wyden and Lummis highlight that the Financial Crimes Enforcement Network of the Treasury Department has never categorized non-custodial crypto services as money transmitters. They question why the DoJ is now applying this classification, potentially labeling software developers as criminals simply for writing and sharing their code.
Wyden specifically raises concerns about the DoJ’s interpretation, stating that it would treat software developers as criminals, which contradicts established law and raises First Amendment concerns.
This inquiry comes after federal prosecutors targeted Samourai, a crypto privacy business. The senators argue that treating non-custodial crypto asset software developers as potential criminals goes against well-established legal interpretations.
The senators’ letter also addresses a recent DoJ court filing, where the department argued that the guidance from FinCEN on crypto mixers does not sufficiently address the issue of “control.” The DoJ believes that any service facilitating fund transfers falls under the legal definition of a “money transmitter,” comparing it to a USB cable transferring data. However, the senators argue that actual control of the funds is necessary for such a classification, which many crypto services do not meet.
The letter to Garland expresses serious concerns about the broad interpretation of the statute related to unlicensed money transmitting businesses. It suggests that this interpretation significantly expands the federal prohibition’s scope, potentially criminalizing individuals involved in non-custodial crypto services.
Currently, Congress is grappling with legislation to establish comprehensive rules for the digital assets industry, including measures against money laundering. While important bills are expected to be voted on soon, the chances of sweeping legislation passing this year are low. As a result, the DoJ continues to operate under existing laws, which, according to the senators, may be stretched beyond their original intent.
FinCEN’s rules provide clarification by defining money transmission as the acceptance of currency from one person and its transmission to another, requiring direct receipt and control of the assets. This definition is crucial to prevent other service providers, such as internet or postal services transmitting payment-related information, from being mistakenly classified as money transmitters.
