DOJ’s recent interpretations on cryptocurrency wallet regulations have received strong criticism from U.S. Senator Cynthia Lummis. Senator Lummis argues that this position would arguably categorize all noncustodial software wallets as unlicensed financial activities, contrary to previous guidance provided by the treasury.
Her concerns reveal a major departure from the settled standards, and it is possible that there is some overreach that would impact property rights of individuals within the cryptocurrency arena.
Industry and Legal Views Regarding DOJ’s Approach
The criticisms of Senator Lummis have been supported by the community of crypto along with the legal experts. One of the critics is Peter Van Valkenburgh, who is the director of research at Coin Center, who has doubts on the fact that the interpretation of the DOJ would stretch the definition of money transmission too broadly.
This understanding may lead to every cryptocurrency wallet and smart contract developer seeking financial licenses, which can hamper innovation and scare the players away from the crypto industry.
In addition, Coin Center has made some efforts to litigate these interpretations. They have filed an amicus brief in support of Tornado Cash developer who is impacted by this new regulatory direction, and claimed that such activities are covered by the First Amendment.
This lawsuit exemplifies the wider repercussions of the stance taken by the DOJ, which may result in profound shifts in operation of the cryptocurrency technologies and their governance in the United States.
Also Read: Senator Cynthia Lummis and Gillibrand Craft Bill for Stablecoin Regulation
