In a recent development, two US lawmakers have taken a stand against the Department of Justice’s (DOJ) move to expand the definition of a money-transmitting business. Senators Cynthia Lummis and Ron Wyden penned a letter to US Attorney General Merrick Garland, expressing their concerns about the potential consequences of the DOJ’s broad interpretation. They argued that such an approach could lead to the criminalization of non-custodial crypto asset software services.
The Senators highlighted that the DOJ’s unprecedented interpretation contradicts the clear intent of Congress and guidance from the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN). They emphasized that the law mandates that a company must have “direct receipt and control of assets” to be classified as a money-transmitting business.
Earlier in April, the DOJ had put forward the argument that a crypto mixer like Tornado Cash functioned as an unlicensed money transmitter. This claim was made in response to a motion for dismissal filed by Roman Storm, the developer of Tornado Cash. The DOJ asserted that controlling funds was not a prerequisite for such classification, stating that the definition of “money transmitting” under Section 1960 extended to “transferring funds on behalf of the public by any and all means.”
Senators Lummis and Wyden firmly opposed the DOJ’s position, maintaining that it was inconsistent with Congressional intent and existing regulations such as the Bank Secrecy Act. They cited several FinCEN regulations to bolster their argument against the broad interpretation advocated by the Justice Department.
The clash between the US lawmakers and the Department of Justice underscores the complexities surrounding the regulation of crypto-related activities. The debate over the definition of a money-transmitting business reflects the need for clarity and alignment between legislative intent and law enforcement actions in the rapidly evolving landscape of digital assets. It remains to be seen how this conflict will be resolved and what implications it may have for the broader crypto industry.