Over 30 crypto companies, led by the DeFi Schooling 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 prison 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 trade 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 Monetary Crimes Enforcement Community’s 2019 tips, which state that builders who don’t take custody of consumer funds should not cash transmitters.
“The DOJ’s new policy position…creates confusion and ambiguity with the spectre of criminal liability,” the letter states. “Essentially, every blockchain developer could be prosecuted as a criminal.”
Crypto’s ‘unlicensed’ cash transmitter companies
Part 1960 of the U.S. Code criminalizes the operation of an “unlicensed money transmitting business.” Nonetheless, crypto companies argue that this could apply solely to custodial providers 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 — comparable to these in opposition to Twister Money 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 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.”
