Two US lawmakers, Senators Cynthia Lummis and Ron Wyden, have recently taken a stand against the Department of Justice’s attempt to expand the definition of a money-transmitting business. They argue that the DOJ’s broad interpretation could potentially criminalize non-custodial crypto asset software services. The Senators emphasized that such an expansive interpretation contradicts both the clear intent of Congress and the guidance provided by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
In response to Tornado Cash’s developer Roman Storm’s motion for dismissal, the DOJ argued that the crypto mixer functioned as an unlicensed money transmitter. The Department contended that having control of the funds was not a necessary factor in determining whether a business falls under the category of money transmitting. They stated that the definition of ‘money transmitting’ does not require the transmitter to have control of the funds, but rather includes any means of transferring funds on behalf of the public. However, Senators Lummis and Wyden believe that the DOJ’s interpretation is flawed, as they argue that the law mandates direct receipt and control of assets for a company to be considered a money-transmitting business.
The Senators also pointed out that the Bank Secrecy Act and various FinCEN regulations support their argument against the DOJ’s stance. They stressed that the Congressional intent behind the law was to ensure that entities engaged in money transmission must have direct control over the assets being transferred. By criminalizing non-custodial crypto asset software services, the DOJ’s interpretation may conflict with the legislative purpose of the statutes and regulations that govern money transmission.
Implications for the Crypto Industry
The controversy surrounding the DOJ’s definition of a money-transmitting business has significant implications for the crypto industry. If the Department’s broad interpretation is upheld, it could have far-reaching consequences for companies and developers operating in the cryptocurrency space. The uncertainty created by conflicting regulatory interpretations may stifle innovation and investment in the sector, ultimately hindering the growth of the digital asset ecosystem.
The disagreement between Senators Lummis and Wyden and the Department of Justice highlights the challenges posed by evolving regulatory frameworks in the crypto industry. As the landscape continues to evolve, it is essential for policymakers, regulators, and industry stakeholders to engage in constructive dialogue to ensure that regulations are both effective and conducive to innovation.
Leave a Reply