DeFi Education Fund Criticizes DOJ’s Interpretation of Money Transmission Laws

The DeFi Education Fund and leading crypto companies have called out the U.S. Department of Justice (DOJ) for its “unprecedented and overly expansive” interpretation of criminal code, which defines crypto firms as unlawful money transmitters.

In a letter signed today and addressed to leaders of the House and Senate Committees on Banking and Judiciary, as well as the House Committee on Financial Services, the DeFi Education Fund stated that the DOJ’s position threatens the viability of U.S.-based software development in the digital asset industry and other sectors.

The letter, signed by 34 entities in the crypto industry, includes prominent exchanges such as Coinbase, Kraken, and Crypto.com, as well as venture capital firms like Andreessen Horowitz, Paradigm, and Dragonfly. Other signatories include Uniswap Labs, Polygon Labs, and Consensys.

> 🚨NEW: Today, the DeFi Education Fund is proud to publish a coalition letter of industry leaders & advocates calling on Congress to correct what is viewed as the DOJ’s dangerous misinterpretation of money transmission laws.
> A thread 🧵⤵️ https://t.co/ZbcifAzbj8
> — DeFi Education Fund (@fund_defi) March 26, 2025

Amanda Tuminelli, the DeFi Education Fund’s executive director and chief legal officer, emphasized that the organization’s top policy priority is obtaining Congressional clarity on Section 1960, which has been improperly used by the DOJ for “regulation by criminal indictment.”

A relevant case highlighted is that of Tornado Cash co-founder Roman Storm, who faces money laundering charges. The DOJ has cited Tornado Cash’s association with state-sponsored hackers as a threat. Advocates have rallied around Storm, arguing that code he created is protected by free speech rights. However, Judge Katherine Polk Failla ruled that the case would move forward based on the applicable statutes.

Judge Failla stated, “These laws do not target protected expressive conduct. They punish money laundering… and the operation of an unlicensed money transmitting business.”

The DeFi Education Fund’s letter points out that Section 1960 is a key piece of U.S. legal code that defines a “money transmitting business.” It serves as the enforcement mechanism that criminalizes the operation of unlicensed money transmitters. The letter argues that despite similar definitions in Section 5330 and Section 1960, the DOJ has unreasonably separated their meanings and taken a novel interpretation under Section 1960.

The organization also noted that criminal courts have not supported the DOJ’s interpretation of Section 1960.

The DeFi Education Fund warns that without intervention, the DOJ’s broad interpretation could create significant liabilities for software developers working on non-custodial technology in the U.S.

The relationship between crypto and regulators has evolved during President Donald Trump’s administration, marked by increasing investigations and suit closures by the SEC, and advancements on a framework for stablecoins. However, clarity from the DOJ on Section 1960 remains a major challenge.

A DeFi Education Fund spokesperson stated, “We are seeing incredible progress, and as an industry, we are working towards a goal of ‘durable wins’—our priority is to ensure long-term protection for software developers in DeFi, crypto, AI, etc. We believe clarity on Congressional intent regarding Section 1960 is crucial for software developers.”

Recently, the non-custodial software developer of Pharos also filed a lawsuit against the DOJ over its interpretation of Section 1960, alleging that the agency criminalizes crypto development with its excessive interpretation.

Edited by Stacy Elliott