A coalition of 34 crypto business organizations has despatched a joint letter to congressional leaders urging them to handle the Division of Justice’s (DOJ) “unprecedented and overly expansive” interpretation of the federal statute governing unlicensed cash transmission.
The letter, signed by corporations together with Coinbase, Kraken, Uniswap Labs, Ledger, Consensys, Paradigm, and the DeFi Schooling Fund, focuses on the DOJ’s latest software of 18 U.S.C. §1960 to software program builders.
The DOJ’s interpretation first emerged within the August 2023 prison indictment of Twister Money developer Roman Storm. Prosecutors charged the open-source developer below Part 1960, which criminalizes working an “unlicensed cash transmitting enterprise.”
Based on the signatories, this marked a departure from a long-standing understanding of the legislation and deviated from steering issued by the Monetary Crimes Enforcement Community (FinCEN), the US Treasury bureau tasked with imposing the Financial institution Secrecy Act (BSA).
DOJ interpretation conflicts with FinCEN steering
On the middle of the dispute is the statutory definition of “cash transmitting enterprise,” which seems in 31 U.S.C. §5330, which governs licensing below the BSA, and 18 U.S.C. §1960, which criminalizes working with out such a license.
Each statutes outline cash transmission as transferring funds “on behalf of the general public by any and all means,” and FinCEN’s 2019 steering states that non-custodial software program builders—those that by no means take possession or management of consumer funds—don’t fall below this class.
The letter argued that the DOJ is ignoring this steering and asserting that §5330’s definition of a money-transmitting enterprise is irrelevant when decoding Part 1960.
This creates conflicting requirements between FinCEN and the DOJ and locations builders at authorized threat for merely publishing or sustaining non-custodial blockchain functions.
Moreover, builders constructing DeFi functions, non-custodial wallets, and different blockchain-based instruments might be topic to felony prosecution regardless of not having management over customers’ belongings.
They emphasize that transferring funds “on behalf of” one other get together requires precise possession and management of the funds in query. With out that custody ingredient, the exercise mustn’t represent cash transmission.
The organizations warn that until the DOJ revises its stance or Congress intervenes, the end result might be a chilling impact on open-source improvement within the US, as builders could keep away from publishing code that might be interpreted as facilitating cash transmission.
The letter then concludes by calling on Congress to “urge the DOJ to appropriate its misapplication of the legislation and make clear Part 1960 to extra clearly convey Congress’s intent.”
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