4 months ago
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Senators say that the crypto mixer services under scrutiny don't meet money transmitter definitions.
Senators Ron Wyden (D-Ore.) and Cynthia Lummis (R-Wyo.) have sent a letter to Attorney General Merrick Garland, questioning the Department of Justice’s (DOJ) “unprecedented interpretation” of the law in its pursuit of cryptocurrency software services, such as Samourai Wallet and Tornado Cash, as unlicensed money-transmitting businesses.
The senators argue that the DOJ’s approach contradicts previous guidance from the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), which held that non-custodial crypto services should not be treated as money transmitters. The lawmakers express concern that the DOJ’s interpretation could treat software developers as criminals for “merely writing and publishing code” used by others, setting a dangerous precedent that contradicts settled law and raises First Amendment concerns.
The letter specifically addresses the DOJ’s recent pursuit of Samourai Wallet, a crypto privacy business, last month. The senators argue that subjecting developers of non-custodial crypto asset software to potential criminal liability as unregistered money transmitters goes against the well-established interpretation of the law.
The DOJ has also argued in a court filing that FinCEN’s guidance on crypto mixers did not address the idea of “control,” a stance that the senators’ letter takes issue with. The lawmakers maintain that the rule actually requires the service to take control of the funds to be treated as a transmitter.
Senator Lummis emphasized the importance of the issue, stating:
“I’m concerned the DOJ’s interpretation would treat software developers as criminals for merely writing and publishing code used by others […]”
The letter comes as Congress grapples with establishing comprehensive digital assets legislation, including money-laundering protections. A legislative piece called FIT21 (Financial Innovation and Technology for the 21st Century Act) is expected to go up for deliberation by the House of Representatives soon.
However, such a legislative piece would only be specific to the governance of crypto markets and would not, as such, establish clearer definitions of what constitutes illicit transactions or the facilitation of such exchanges through open software.
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