South Korean Court Lifts Upbit’s Ban: What’s Next for the Crypto Exchange?
March 27, 2025
DeFi Sectors Set for Major Growth in 2025, Says Curve Founder
March 27, 2025Crypto Firms Urge Congress to Challenge DOJ’s Interpretation of Money-Transmitting Laws
A coalition of 34 crypto firms and advocacy groups is calling on Congress to intervene in what they describe as the Department of Justice’s (DOJ) “unprecedented and overly expansive” interpretation of money-transmitting laws. This legal stance has been used to charge developers of crypto privacy tools like Tornado Cash, sparking concerns about the broader impact on blockchain development in the United States.
The Controversy Over DOJ’s Interpretation
On March 26, the coalition, led by the DeFi Education Fund and including major players like Kraken and Coinbase, sent a letter to key congressional committees. They argue that the DOJ’s position could potentially criminalize any blockchain developer in the country.
At the heart of the issue is the DOJ’s use of U.S. money-transmitting laws to charge Tornado Cash developers Roman Storm and Roman Semenov with money laundering. The DOJ has applied a broad definition of what constitutes a “money transmitting business,” seemingly ignoring previous guidance from the Financial Crimes Enforcement Network (FinCEN).
The coalition points out that FinCEN’s 2019 guidance clearly states that software developers who do not control or hold user funds are not considered money transmitters. However, the DOJ has taken a different stance, disregarding this definition when prosecuting crypto developers.
The letter warns that the DOJ’s interpretation creates regulatory confusion and could stifle innovation in the U.S. crypto industry. If software developers fear legal repercussions for merely creating decentralized financial tools, many could be deterred from building new blockchain projects.
This concern extends beyond Tornado Cash. The DOJ has also charged Samourai Wallet co-founders Keonne Rodriguez and William Lonergan Hill under similar legal arguments. Meanwhile, crypto advocacy groups worry that non-custodial software—technology that allows users to maintain full control over their own funds—could become a target for prosecution.
Conflicting Government Interpretations
The coalition also highlights a critical issue: the inconsistency between two key sections of U.S. law. Title 31, Section 5330 defines who must obtain a money-transmitting license, while Title 18, Section 1960 criminalizes operating without one. The DOJ appears to be treating these sections as separate, even though FinCEN’s guidance suggests they should be interpreted together.
As a result, there are now two conflicting interpretations of money transmission—one from FinCEN and another from the DOJ. This lack of clarity puts crypto developers in a difficult position, unsure of whether their projects will face legal action.
In addition to the coalition’s efforts, legal challenges are already underway. In January, Michael Lewellen, a fellow at the crypto advocacy group Coin Center, sued U.S. Attorney General Merrick Garland. Lewellen is seeking a ruling that his non-custodial software is legal and an injunction to prevent the DOJ from prosecuting him under money-transmitting laws.
Lewellen argues that the DOJ is stretching the definition of money transmission beyond its constitutional limits, criminalizing activities that should be protected under existing regulations.
What’s Next for Crypto Developers in the U.S.?
The DOJ’s aggressive stance on money transmission laws has sparked a broader debate on the future of decentralized finance (DeFi) and blockchain development in the U.S. If Congress does not intervene, crypto developers may increasingly move their operations overseas to avoid legal risks.
The coalition’s letter underscores a growing concern among industry participants: the fear that legal uncertainty and regulatory overreach could drive innovation away from the United States, leaving the country behind in the global blockchain revolution.
The outcome of this debate could shape the regulatory landscape for crypto developers for years to come. Whether Congress acts to clarify money-transmitting laws or allows the DOJ to continue its broad interpretation remains to be seen.
