Two US lawmakers, Senators Cynthia Lummis and Ron Wyden, have taken a stand against the Department of Justice’s (DOJ) attempt to broaden the definition of a money-transmitting business. They believe that the DOJ’s expansive interpretation could potentially lead to the criminalization of non-custodial crypto asset software services. In a letter addressed to US Attorney General Merrick Garland, the Senators pointed out that the DOJ’s stance contradicts the clear intent of Congress and the established guidance provided by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
The Department of Justice made headlines in April when it argued that a crypto mixer, specifically in the case of developer Roman Storm’s Tornado Cash, functioned as an unlicensed money transmitter. The DOJ’s argument was put forth in response to Storm’s motion for dismissal. One of the key points raised by the DOJ was that having control over the funds being transferred was not a prerequisite for categorizing an entity as a money transmitter. According to the Justice Department, the definition of ‘money transmitting’ does not hinge on the money transmitter having control over the funds but extends to encompass ‘transferring funds on behalf of the public by any and all means.’
Senators Lummis and Wyden strongly disagree with the DOJ’s interpretation, asserting that the law’s original intent laid out by Congress stipulates that a company must have ‘direct receipt and control of assets’ to be classified as a money-transmitting business. They also referred to the Bank Secrecy Act along with several FinCEN regulations to bolster their argument against the DOJ’s position. The Senators’ pushback against the DOJ’s expansive interpretation underscores their commitment to ensuring clarity and adherence to the legislative framework surrounding financial regulations.
The disagreement between lawmakers and the Department of Justice highlights the ongoing debate around the evolving landscape of financial regulations, particularly in the realm of crypto assets and money transmission. As technology continues to advance, lawmakers and regulatory bodies face the challenge of interpreting existing laws in a way that both fosters innovation and ensures compliance with established standards. The outcome of this clash of perspectives will have significant implications for the future of financial services and the digital asset ecosystem.
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