Two US lawmakers have opposed the Justice Department’s attempt to expand the definition of a money transmission company.
On a May 9th letter Against U.S. Attorney General Merrick Garland, Senators Cynthia Lummis and Ron Wyden argued that the DOJ’s broad interpretation could criminalize non-custodial software services for crypto assets.
According to the lawmakers:
“The DOJ’s unprecedented interpretation of this statute in the context of non-custodial software services for crypto assets contradicts the clear intent of Congress and the authoritative guidance of the Treasury Department’s Financial Crimes Enforcement Network (FinCEN). ”
DOJ’s argument
In April, the DOJ argued that the crypto mixer was operating as an unlicensed money transmitter, rebutting Tornado Cash developer Roman Storm’s dismissal filing.
In its motion, the DOJ argued that auditing funds was not a requirement for such classification. According to the Ministry of Justice:
“The definition of ‘transfer of funds’ in Section 1960 does not require the money transmitter to have ‘control’ over the funds being transferred. The definition extends to “the transfer of money on behalf of the public by any means.”
Congress intent
The lawmakers believe the DOJ’s position was wrong, as Congress’ intent for the law requires that a company must have “direct receipt and control of assets” to qualify as a money transmission company.
The lawmakers also cited the Bank Secrecy Act and various FinCEN regulations to support their argument against the DOJ’s position.
The senators also stated:
“Non-custodial crypto service providers cannot be classified as money transmitters because users of such services retain exclusive possession and control of their crypto assets.”
The lawmakers urged the DOJ not to deviate “from the clear, logically sound and established definition of ‘funds transfer’ as established by FinCEN.” They added:
“Subjecting developers of non-custodial crypto asset software to potential criminal liability as unregistered money transmitters is contrary to the established interpretation of this provision and will only serve to stifle innovation and undermine confidence in the DOJ’s respect for the to shake the rule of law.”
