Over 30 Crypto Firms Urge Congress to Clarify Money Transmitter Laws Amid DOJ’s Broader Interpretation

“The DOJ’s new policy position…creates confusion and ambiguity with the spectre of criminal liability.” These stark words from a coalition of over 30 cryptocurrency firms, led by the DeFi Education Fund, highlight a critical issue at the heart of the crypto industry. The firms have penned an urgent letter to Congress, seeking clarity and intervention regarding the Department of Justice’s (DOJ) recent interpretation of money transmitter laws, which they argue could wrongly criminalize non-custodial software developers (those who do not hold user funds). This stance, first highlighted in an August 2023 indictment, threatens to stifle U.S. crypto innovation and drive developers abroad.

• 30+ crypto firms write to Congress
• DOJ’s interpretation of money transmitter laws under scrutiny
• Non-custodial developers at risk of criminalization
• Industry warns of potential stifling of U.S. crypto innovation

The crux of the issue lies in the DOJ’s interpretation of Section 1960 (a law criminalizing unlicensed money transmitting businesses). The firms contend that this interpretation goes against what the Financial Crimes Enforcement Network (FinCEN) said in 2019, which explicitly stated that non-custodial developers are not money transmitters. The letter, signed by heavyweights like Coinbase, Paradigm, and Kraken, warns of the chilling effect this could have on innovation. Imagine if every blockchain developer could be thrown in jail just for doing their job—the DOJ’s stance is about as clear as a foggy day in San Francisco: confusing and potentially dangerous for developers.

The DOJ’s broader interpretation came to light in the case against Tornado Cash developers Roman Storm and Roman Semenov, indicted in August 2023. Tornado Cash, a crypto mixing service, was initially sanctioned by the U.S. Treasury for alleged use by North Korea’s Lazarus Group. However, the Treasury removed Tornado Cash from the sanctions list in March 2025, yet the legal issues surrounding the case continue to be contested. This case, along with others, suggests that the DOJ is expanding its scope beyond what the industry believes was intended by Congress. The letter to Congress states,

“The DOJ’s new policy position…creates confusion and ambiguity with the spectre of criminal liability.”

It further warns,

“Essentially, every blockchain developer could be prosecuted as a criminal.”

The crypto firms are calling on Congress to step in and clarify Section 1960 to ensure it aligns with the original intent. They argue,

“The federal government should not be playing a game of bait and switch.”

and urge,

“Congress should urge the DOJ to correct its misapplication of the law, and clarify Section 1960 to more clearly convey Congress’s intent.”

The stakes are high. Without Congressional intervention, the firms fear that the U.S. could lose its edge in the global crypto race. The letter starkly notes that such regulatory uncertainty might drive developers and innovation overseas, where regulatory environments may be more favorable. This situation underscores the ongoing tension between crypto innovation and regulatory oversight, a battle that could shape the future of blockchain technology and financial freedom.

It’s not just about the money; it’s about the freedom to innovate without the looming threat of criminal liability. As advocates for decentralization and effective accelerationism, we must champion the cause of developers who are pushing the boundaries of what’s possible in finance and beyond. Yet, we must also acknowledge the dark side—where regulatory overreach can stifle progress and drive talent away from the U.S.

While Bitcoin remains the beacon of this revolution, we cannot ignore the roles that altcoins and other blockchain systems play. Ethereum, for instance, serves niches that Bitcoin may not, and fostering a diverse ecosystem is crucial for the broader adoption and evolution of decentralized technologies.

Key Questions and Takeaways

What is the main concern of the crypto firms regarding the DOJ’s interpretation of money transmitter laws?

The main concern is that the DOJ’s interpretation could wrongly criminalize non-custodial software developers, creating confusion and ambiguity about what constitutes a money transmitter.

How does the DOJ’s interpretation differ from FinCEN’s guidelines?

The DOJ’s interpretation includes non-custodial software developers as money transmitters, whereas FinCEN’s 2019 guidelines explicitly state that developers who do not take custody of user funds are not money transmitters.

What could be the potential impact on U.S. crypto innovation if Congress does not intervene?

Without intervention, U.S. crypto innovation could be stifled, potentially driving developers overseas to more favorable regulatory environments.

Who are some of the key signatories to the letter sent to Congress?

Major signatories include Coinbase, Paradigm, and Kraken.

What action do the crypto firms want Congress to take?

The firms want Congress to urge the DOJ to correct its misapplication of the law and clarify Section 1960 to accurately reflect Congress’s intent.

In the world of crypto, where the promise of decentralization and financial sovereignty is constantly at odds with regulatory frameworks, it’s essential to stay vigilant. While we cheer for the revolution, we must also call out the bullshit and keep pushing for clarity and fairness. After all, the future of money and technology hangs in the balance.