The Bipartisan Effort to Safeguard Bitcoin Innovators from Biden Overreach

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Bipartisan Senators Challenge DOJ’s New and Aggressive Interpretation of Bitcoin Regulations

U.S. Senators Cynthia Lummis (R-WY) and Ron Wyden (D-OR) have expressed significant concerns to Attorney General Merrick Garland regarding the Justice Department’s reinterpretation of money transmission laws as they pertain to digital assets. A letter issued last week detailed critique of the DOJ’s recent policy shift, arguing that the new interpretation is not only a deviation from established definitions by the Financial Crimes Enforcement Network (FinCEN) but also a significant threat to the digital economy’s entrepreneurial spirit.

Senator Lummis emphasized the necessity of protecting the ability for Americans to self-custody their digital assets, likening the role of wallet software in financial transactions to that of roads in bank robberies — fundamental to operations but not responsible for misuse. She stressed that the reinterpretation by the DOJ under the Biden administration could undermine America’s leadership in global economic innovation. A growing hot topic in the looming Presidential race.

Senator Wyden raised concerns about the implications for software developers, suggesting that treating them as criminals for their coding activities sets a dangerous precedent that challenges both settled law and the First Amendment. He advocated for a targeted enforcement approach that focuses on actual illegal activities rather than the tools used in those activities.

The Senators’ letter highlights the DOJ’s stance as a significant shift from FinCEN’s well-established guidelines, which define money transmission as requiring direct control over a customer’s assets. According to FinCEN’s interpretation, non-custodial crypto service providers, which do not take possession of user assets, do not qualify as money transmitters. This stance has been consistent in FinCEN’s guidance over the years, and the Senators argue that any deviation not only creates legal uncertainty but also potentially stifles innovation by imposing undue burdens on non-custodial services.

The bipartisan plea to Attorney General Garland is to revert to FinCEN’s original interpretation, ensuring that the development of transformative technologies and the rule of law are not mutually exclusive objectives. The Senators are urging the DOJ to discard its flawed interpretation and chart a course that fosters both innovation and legal clarity.

Read the full letter from Senators Lummis and Wyden here.

This issue cuts to the core of the ongoing debate over the regulation of digital assets and the broader implications for privacy, ownership, and innovation in the United States. As the landscape of digital assets continues to evolve, the call for clear, consistent, and fair regulatory approaches becomes increasingly crucial.