The Controversy Surrounding the DOJ’s Attempt to Broaden the Definition of Money-Transmitting Business

The Controversy Surrounding the DOJ’s Attempt to Broaden the Definition of Money-Transmitting Business

Recently, Senators Cynthia Lummis and Ron Wyden raised concerns over the Department of Justice’s (DOJ) attempt to expand the definition of a money-transmitting business. In a letter to US Attorney General Merrick Garland, the lawmakers argued that the DOJ’s broad interpretation could potentially criminalize non-custodial crypto asset software services. They emphasized that the DOJ’s interpretation goes against the clear intent of Congress and the guidance provided by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

In response to Tornado Cash’s developer Roman Storm’s motion for dismissal, the DOJ claimed that the crypto mixer operated as an unlicensed money transmitter. The DOJ’s argument stated that having direct control of the funds was not a requirement for such classification. According to the Justice Department, the definition of ‘money transmitting’ does not stipulate that the money transmitter must have control of the funds but extends to transferring funds on behalf of the public through any means available.

Senators Lummis and Wyden pointed out that the DOJ’s position contradicted the Congressional intent behind the law. They argued that for a company to be considered a money-transmitting business, it must have direct receipt and control of assets. The lawmakers also referenced the Bank Secrecy Act and several FinCEN regulations to bolster their argument against the DOJ’s stance. They emphasized the importance of aligning the interpretation of the law with the original legislative intent to avoid unintended consequences.

The broadening of the definition of a money-transmitting business by the DOJ could have significant implications for non-custodial crypto asset software services. If non-custodial platforms are classified as money transmitters based on the expanded interpretation, it could result in increased regulatory scrutiny and potential legal challenges for these services. This could stifle innovation in the crypto space and create uncertainty for developers and users alike.

The controversy surrounding the DOJ’s attempt to expand the definition of a money-transmitting business has sparked concerns among lawmakers and industry stakeholders. The debate highlights the importance of clear and consistent interpretation of regulations in the rapidly evolving crypto landscape. It remains to be seen how this issue will be resolved and whether adjustments will be made to ensure that the original legislative intent is upheld while addressing the unique characteristics of the crypto industry.

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