A coalition of more than 30 crypto companies and advocacy groups called on Congress in March 2025 to clarify how federal money-transmission laws apply to blockchain software developers. In a letter, the group argued that the Department of Justice’s interpretation of the law could expose developers of non-custodial software to criminal liability.
Led by the DeFi Education Fund and signed by companies including Coinbase and Kraken, the coalition said the DOJ’s position creates uncertainty around Section 1960, the federal statute covering unlicensed money-transmitting businesses.
The dispute over money transmission
The coalition’s argument centers on whether developers who create software but do not take custody or control of users’ funds can be treated as money transmitters. It pointed to FinCEN’s 2019 guidance, which distinguished software providers from businesses that accept and transmit customer funds.
The issue became central to the prosecution of Tornado Cash developer Roman Storm. The DOJ originally charged Storm and Roman Semenov in 2023 with conspiracy to commit money laundering, sanctions violations and operating an unlicensed money-transmitting business. The department alleged that Tornado Cash processed more than $1 billion in criminal proceeds.
The legal question became more complicated as prosecutors changed their case. In 2025, the DOJ dropped one Section 1960 theory against Storm but continued pursuing a separate allegation that he knowingly transmitted illicit proceeds.
The Tornado Cash case moved beyond the policy debate
Storm’s case ultimately produced a mixed result for the competing arguments. In August 2025, a federal jury convicted him of conspiring to operate a money-transmitting business after a four-week trial. The DOJ said the evidence showed that Tornado Cash transmitted more than $1 billion in criminal proceeds.
At the same time, another major part of the Tornado Cash dispute moved in the opposite direction. The Treasury Department’s Office of Foreign Assets Control removed Tornado Cash from its sanctions list in March 2025, although Roman Semenov remained designated.
The developments leave two separate questions for the crypto industry. One concerns sanctions and the legal treatment of immutable smart contracts. The other concerns when operating or facilitating a decentralized protocol crosses the line into money transmission under U.S. criminal law. The March coalition letter sought congressional clarity on the latter, but Storm’s conviction shows that the legal boundary remains contested.
Meanwhile, the DOJ has been authorized to sell Bitcoin seized from the Silk Road case, adding another example of how federal authorities continue to manage and enforce laws involving digital assets.
If you want to read more news articles like this, visit DeFi Planet and follow us on Twitter, LinkedIn, Facebook, Instagram, and CoinMarketCap Community.
“Take control of your crypto portfolio with MARKETS PRO, DeFi Planet’s suite of analytics tools.”
