Crypto Firms Plead for Clarity: Will Congress Save Them from Legal Quicksand?

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Well now, gather ’round, folks, for a tale of over thirty crypto firms, led by none other than the DeFi Education Fund, who are raising a ruckus in the hallowed halls of Congress. They’re hollering for some good ol’ clarity on the Department of Justice’s interpretation of money transmitter laws, which they claim could land innocent non-custodial software developers in a heap of trouble—criminal trouble, mind you! 😱

In a letter that surely took longer to write than a Mississippi riverboat ride, they’ve reached out to the big wigs, including Senate Banking Committee Chairman Tim Scott and House Judiciary Committee Chairman Jim Jordan. The industry is arguing that the DOJ’s recent take on Section 1960—first introduced in an indictment that came out in August 2023—has strayed far from the guidance of the Treasury Department. It’s like trying to find your way home after a night of too much sarsaparilla! 🍹

Among the signatories are the likes of Coinbase, Paradigm, and Kraken, who are waving their arms and shouting that the DOJ’s interpretation is as clear as mud. They point to the Financial Crimes Enforcement Network’s 2019 guidelines, which state that developers who don’t take custody of user funds are not, I repeat, NOT money transmitters. It’s like saying a man who sells fishing rods isn’t responsible for the fish you catch! 🎣

“The DOJ’s new policy position…creates confusion and ambiguity with the spectre of criminal liability,” the letter laments. “Essentially, every blockchain developer could be prosecuted as a criminal.” Well, isn’t that a fine kettle of fish? 🐟

Crypto’s ‘unlicensed’ money transmitter businesses

Now, Section 1960 of the U.S. Code is a real doozy, criminalizing the operation of an “unlicensed money transmitting business.” But the crypto folks argue that this should only apply to those custodial services that actually hold and transfer user funds, not the poor non-custodial software providers who are just trying to make a living! It’s like blaming the postman for the contents of your mail! 📬

Historically, courts have looked to FinCEN’s regulations to determine compliance, but the DOJ’s recent legal actions—like those against the Tornado Cash developers—suggest a broader interpretation that could lead to more prosecutions than a cat has lives. 🐱

The letter warns that unless Congress steps in, U.S. crypto innovation could be stifled faster than a cat in a room full of rocking chairs, pushing developers to seek greener pastures overseas. 🌍

“The federal government should not be playing a game of bait and switch,” the letter reads. “Congress should urge the DOJ to correct its misapplication of the law, and clarify Section 1960 to more clearly convey Congress’s intent.” Well, if that ain’t the truth, I don’t know what is! 🤷‍♂️

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2025-03-27 00:03