Recently, two US lawmakers, Senators Cynthia Lummis and Ron Wyden, have raised concerns regarding the Department of Justice’s attempt to broaden the definition of a money-transmitting business. They argue that the DOJ’s interpretation could potentially criminalize non-custodial crypto asset software services. According to the lawmakers, this interpretation goes against the intent of Congress and contradicts guidance from the Financial Crimes Enforcement Network (FinCEN).
In response to a motion for dismissal filed by Roman Storm, the developer of Tornado Cash, the DOJ claimed that the crypto mixer operated as an unlicensed money transmitter. The Department argued that having control over funds was not a prerequisite for such a classification. They stated that the definition of ‘money transmitting’ does not necessitate control over the funds being transferred, but rather extends to any means of transferring funds on behalf of the public.
Senators Lummis and Wyden maintain that the DOJ’s position is misguided, as they believe that the law requires companies to have direct receipt and control of assets in order to be classified as a money-transmitting business. They referenced the Bank Secrecy Act and various FinCEN regulations to support their argument against the DOJ’s interpretation.
The ongoing debate between lawmakers and the Department of Justice has significant implications for the crypto industry. If the DOJ’s definition of a money-transmitting business is broadened, it could have far-reaching consequences for non-custodial crypto asset software services. Such a move might stifle innovation in the sector and create uncertainty for developers and users alike.
In light of this controversy, there is a pressing need for clarity and consistency in the regulation of crypto-related activities. It is essential for lawmakers and regulatory agencies to work together to establish clear guidelines that support innovation while also ensuring compliance with existing laws and regulations. Finding the right balance between fostering technological advancement and preventing illicit activities will be crucial in shaping the future of the crypto industry.