• Sens. Ron Wyden and Cynthia Lummis criticized the U.S. Justice Department’s enforcement approach to crypto mixers and its interpretation of money transmitters
• They argued that the DOJ’s definition of money transmission does not include non-custodial crypto service providers under existing laws and regulations
• The senators cited recent cases against Samourai Wallet and Tornado Cash as examples of the DOJ’s overreach in this area
The US Department of Justice (DOJ) has recently taken an aggressive stance towards certain players in the cryptocurrency industry. This has prompted pushback from US Senators, who are concerned the DOJ is overstepping its authority.
Background on the Bank Secrecy Act
The Bank Secrecy Act, passed in the 1970s, requires financial institutions to assist US government agencies in detecting money laundering. Specifically, it requires businesses defined as “money transmitting services” to register with the Financial Crimes Enforcement Network (FinCEN), an arm of the Treasury Department.
DOJ Applies the BSA to Crypto
The DOJ has recently accused two crypto mixing services, Tornado Cash and Samourai Wallet, of violating the Bank Secrecy Act by transmitting money without registering with FinCEN.
Senators Argue Non-Custodial Services Don’t Qualify
In a letter to Attorney General Merrick Garland, Senators Ron Wyden (D-OR) and Cynthia Lummis (R-WY) argue the DOJ is misapplying the Bank Secrecy Act. They state non-custodial crypto services do not actually accept custody of users’ assets, so they do not meet the definition of “money transmitting services.”
Concerns Over Censorship and Free Speech
The Senators express concerns the DOJ’s actions may lead to censorship and violate free speech. Lummis stated: “Wallet software is no more to blame for illicit finance than a highway is responsible for a bank robber’s getaway car.”
Future Policy at Stake
How these issues play out could determine the regulatory landscape for cryptocurrency moving forward. For now, the policy debate continues.
Conclusion
The DOJ’s recent crypto mixing indictments signal an aggressive stance on cryptocurrency compliance issues. But Senators and industry groups are pushing back, concerned that crypto developers are being unfairly targeted. With bipartisan lawmakers questioning the DOJ’s moves, this will likely continue to be a hot policy issue in the months and years ahead.
