Recently, Senators Cynthia Lummis and Ron Wyden voiced their opposition to the Department of Justice’s proposed expansion of the definition of a money-transmitting business. In a letter addressed to US Attorney General Merrick Garland, the lawmakers expressed concerns that the broad interpretation could potentially criminalize non-custodial crypto asset software services. They argued that the DOJ’s stance contradicted the intended purpose of Congress and the existing guidelines from the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Department of Justice defended its position by citing a recent case involving the crypto mixer, Tornado Cash. The DOJ claimed that the developer, Roman Storm, was operating as an unlicensed money transmitter, despite not having direct control over the funds being transferred. According to the DOJ, the definition of “money transmitting” in Section 1960 does not explicitly require the transmitter to possess control over the funds, but rather extends to any means of transferring funds on behalf of the public.
Senators Lummis and Wyden argued that the DOJ’s interpretation was flawed, pointing to the original intent of the law that mandates a company to have direct receipt and control of assets in order to be classified as a money-transmitting business. They also referenced the Bank Secrecy Act and various FinCEN regulations to support their argument against the DOJ’s position. The lawmakers emphasized the importance of aligning with established regulations and guidelines to avoid potential overreach and unintended consequences in the crypto industry.
The ongoing debate between US lawmakers and the Department of Justice highlights the regulatory challenges faced by the crypto industry. As digital assets continue to gain mainstream adoption, the need for clear and consistent regulatory frameworks becomes increasingly crucial. The outcome of this debate could have far-reaching implications for how crypto-related businesses operate and innovate in the future. It also underscores the importance of dialogue and collaboration between policymakers, regulators, and industry stakeholders to ensure a balanced approach to regulation that fosters innovation while addressing potential risks.
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