A collective of crypto companies has called on Congress to encourage the Department of Justice to modify its interpretation of money-transmitting regulations. The understanding of the laws in question was recently utilized to accuse the developers of the cryptocurrency mixer Tornado Cash.
On March 26, a letter endorsed by 34 cryptocurrency firms and advocate groups was delivered to the Senate Banking Committee, House Financial Services Committee, and the House and Senate judiciary committees. The group alleges that the DOJ’s interpretation of unlicensed money transmitting laws could potentially incriminate every blockchain developer.
Amongst the signatories, Coinbase and Kraken joined in the letter led by the DeFi Education Fund. They collectively assert that the DOJ’s interpretation of this law is causing doubt and uncertainty. This group believes that this interpretation jeopardizes U.S. software development in the digital asset sector.
The blockchain community argues that the DOJ’s stance on what constitutes a money-transmitting business is conflicting and unfair. The DOJ’s interpretation would put non-custodial software developers at risk, possibly ending development of these technologies in the United States.
The conflict arose largely due to differing interpretations of ‘money transmission’ by the Financial Crimes Enforcement Network (FinCEN) and the DOJ. As a result, developers have faced prosecution under laws extended “beyond what the Constitution allows,” according to Michael Lewellen, a fellow of the crypto advocacy group Coin Center.