30 crypto firms call on Congress for clarity on money transmitter rules

Over 30 crypto companies, led by the DeFi Training Fund, are urging Congress to deal with the Division of Justice’s interpretation of cash transmitter legal guidelines, which they are saying may expose non-custodial software program builders to felony legal responsibility.

In a letter despatched to key lawmakers, together with Senate Banking Committee Chairman Tim Scott and Home Judiciary Committee Chairman Jim Jordan, the business argues that the DOJ’s stance on Part 1960—first launched in an August 2023 indictment — deviates from present Treasury Division steering.

The signatories, together with Coinbase, Paradigm, and Kraken, declare that the interpretation disregards the Financial Crimes Enforcement Network’s 2019 pointers, which state that builders who don’t take custody of consumer funds should not cash transmitters.

“The DOJ’s new coverage place…creates confusion and ambiguity with the spectre of felony legal responsibility,” the letter states. “Basically, each blockchain developer may very well be prosecuted as a felony.”

Crypto’s ‘unlicensed’ cash transmitter companies 

Part 1960 of the U.S. Code criminalizes the operation of an “unlicensed cash transmitting enterprise.” Nonetheless, crypto companies argue that this could apply solely to custodial companies that really maintain and switch consumer funds, not non-custodial software program suppliers. 

Courts have traditionally referenced FinCEN’s laws to find out compliance, however the DOJ’s current authorized actions — corresponding to these towards Tornado Cash builders — recommend a broader interpretation that might result in extra prosecutions.

The letter warns that except Congress intervenes, U.S. crypto innovation may very well be stifled, pushing builders abroad. 

“The federal authorities shouldn’t be taking part in a sport of bait and change,” the letter reads. “Congress ought to urge the DOJ to right its misapplication of the regulation, and make clear Part 1960 to extra clearly convey Congress’s intent.”