Senators Ron Wyden and Cynthia Lummis have expressed significant apprehension regarding the existing crypto regulations in the US, particularly focusing on the Department of Justice’s (DOJ) recent position concerning non-custodial crypto asset software services. In a letter addressed to Attorney General Merrick Garland, they contend that the DOJ’s understanding of federal laws poses a risk of criminalizing individuals within the US who provide such services.
Senators Disapprove of DOJ’s Position on Crypto Services That Are Not Custodial
The senators claim that Congress intended nothing less than for the DOJ to interpret the law in an unusual way that makes it illegal to run an unregistered money-transmitting business. They further point out that it deviates from the rules set forth by the Financial Crimes Enforcement Network (FinCEN).
They caution that the crypto industry’s creativity may be stunted by this interpretation. Additionally, it can erode confidence in the rule of law.
According to both senators, customers of non-custodial cryptocurrency services are able to maintain complete ownership and control over their digital assets. Service providers do not “accept” or “control” them, according to this. Transactions take place on the user’s device, private from outside interference.
Echoing the senators’ argument, FinCEN has affirmed that non-custodial services are exempt from money transmitter registration requirements due to the absence of direct receipt and control of assets.
According to the letter addressed to Attorney General Merrick Garland, non-custodial crypto service providers cannot be categorized as money transmitter businesses because users maintain sole possession and control of their crypto assets.
Transactions are conducted on users’ local devices without third-party access, with users retaining exclusive custody and control over their private keys.
The letter urges the DOJ to reconsider its interpretation of Section 1960, emphasizing the importance of upholding the rule of law and facilitating the advancement of transformative technologies. Senator Lummis also expressed her concerns on Twitter, criticizing the DOJ for potentially criminalizing Bitcoin software development in the US.
While the letter did not explicitly mention any specific crypto services, many view it in light of the recent case involving Samourai Wallet, a Bitcoin wallet offering financial anonymity.
The platform’s co-founders were charged by the DOJ with various financial crimes, including operating an unlicensed money-transmitting business. Consequently, the co-founders were arrested, and the platform’s operational infrastructure was seized, with its app removed from Google’s Play Store in the US.
May 2024, Cryptoniteuae
