Two US lawmakers, Senators Cynthia Lummis and Ron Wyden, have recently voiced their opposition to the Department of Justice’s attempt to broaden the definition of a money-transmitting business. They argue that this expansion could potentially criminalize non-custodial crypto asset software services. In a letter to US Attorney General Merrick Garland, the lawmakers expressed their concerns that the DOJ’s interpretation goes against the intent of Congress and the guidance of the Financial Crimes Enforcement Network (FinCEN).
The Department of Justice put forth an argument in April claiming that a crypto mixer, specifically Tornado Cash, operated as an unlicensed money transmitter. The developer, Roman Storm, had filed a motion for dismissal which was countered by the DOJ. They asserted that controlling funds was not a necessary requirement to be classified as a money transmitter. According to the DOJ, the definition of ‘money transmitting’ extends to transferring funds on behalf of the public through any means, without the need for direct control over the funds.
Senators Lummis and Wyden strongly disagreed with the DOJ’s position, noting that the law’s original intent mandates that a company must have direct receipt and control of assets in order to be considered a money-transmitting business. They referenced the Bank Secrecy Act and various FinCEN regulations to support their argument against the DOJ’s broad interpretation. The lawmakers believe that the DOJ’s stance is not aligned with the legislative framework surrounding money transmission.
The opposition from Senators Lummis and Wyden holds significant implications for the crypto industry, particularly for non-custodial crypto asset software services. If the DOJ’s interpretation is allowed to stand, it could potentially impact the way such services operate and classify under existing regulations. The ongoing debate highlights the complexities and challenges associated with regulating crypto-related activities in the current legal landscape.
The clash between US lawmakers and the Department of Justice over the definition of a money-transmitting business underscores the need for clear and consistent regulatory guidelines in the crypto industry. As the market continues to evolve and innovate, it is crucial for policymakers to strike a balance between fostering innovation and preventing illicit activities. The outcome of this dispute will likely shape the future regulatory framework for crypto asset services in the United States.
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