Two U.S. senators have criticized the Department of Justice (DOJ)’s recent interpretation of “money transmission,” which expands requirements to non-custodial software. They expressed concerns about its implications for crypto networks and financial innovation. One senator highlighted the worry that the DOJ’s interpretation could treat software developers as criminals simply for writing and releasing code used by others.

Senators Criticize DOJ’s Crypto Policy

Senators Cynthia Lummis (R-WY) and Ron Wyden (D-OR) wrote a letter to U.S. Attorney General Merrick Garland on May 9, expressing significant concerns about the DOJ’s departure from the clear and established definition of “money transmission” provided by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

The DOJ’s broad interpretation, which extends money transmission requirements to non-custodial software, has been evidenced in two recent criminal cases. The first involved the U.S. Attorney’s Office in the Southern District of New York charging the co-founders of Samourai, a non-custodial bitcoin service, with conspiracy to commit money laundering and operating an unlicensed money-transmitting business. In the second case, the U.S. Attorney’s Office in the Southern District of New York filed a reply brief against the developers of Tornado Cash, asserting that custody is not necessary for a service to constitute an unlicensed money transmission.

“The DOJ’s unprecedented and unlawful change in interpretation of the law threatens to criminalize core elements of bitcoin and other crypto networks and prevents responsible financial innovation from occurring in the U.S.,” the senators explained.

Senator Lummis stated:

The Biden administration overturning the longstanding FinCEN interpretation is not only legally wrong but also undermines the entrepreneurial spirit that drives America’s global economic leadership.

“Wallet software should not be held accountable for illicit finance any more than a highway should be blamed for a bank robber’s getaway car. I am steadfast in ensuring that every American has the ability to self-custody their assets, and that the burgeoning bitcoin and crypto asset industry can operate legally in this country. The right to store private keys in one’s own wallet must be safeguarded,” the senator emphasized.

“The government should prosecute individuals who use digital assets for money laundering or tax evasion, but law enforcement agencies should not adopt conflicting interpretations of the law,” Senator Wyden stressed, adding:

I am concerned that the DOJ’s interpretation could criminalize software developers for simply writing and releasing code used by others – a troubling precedent that contradicts established law and raises serious First Amendment issues.

“Senator Lummis and I urge the Justice Department to follow FinCEN’s lead and focus on individuals who illegally transmit digital assets, not on coders and innovators,” he concluded.

What are your thoughts on the DOJ’s “unlawful” interpretation of money transmission and its potential impact on the crypto industry? Share your opinions in the comments section below.