May 9, 2024
Hon. Merrick Garland
Attorney General of the United States
950 Pennsylvania Avenue, N.W.
Washington, D.C. 20530
Re:Money Transmitting Business Registration and Non-Custodial Crypto Asset Software

Dear General Garland,
We write to express our grave concerns regarding the U.S. Department of Justice's (DOJ) recent policy
arguments that dramatically expand the scope of the Federal prohibition on operating an unlicensed
money transmitting business.1 The DOJ's unprecedented interpretation of this statute in the context of
non-custodial crypto asset software services contradicts the clear intent of Congress and the authoritative
guidance of the Department of the Treasury's Financial Crimes Enforcement Network (FinCEN). This
interpretation threatens to criminalize Americans offering non-custodial crypto asset software services.
The Federal money transmitting business statute (18 U.S.C. § 1960) makes it a criminal offense to“knowingly conduct … an unlicensed money transmitting business.” 2 Criminal liability applies when aperson: (1) was required by a State to become licensed as a money transmitter; (2) when a person isrequired by Federal law to register; or (3) if the person is engaged in money transmission (whetherregistered or not) and is engaged in illicit finance. 3The Bank Secrecy Act (31 U.S.C § 5330) defines “money transmission” as “accepting currency, funds, orvalue that substitutes for currency and transmitting the currency, funds, or value that substitutes forcurrency by any means.” 4 The use of the term “accepting” which is commonly defined as “to receive(something offered) willingly”5 provides clear evidence that Congress intended a requirement that amoney transmitter have taken control of users’ assets as the sine qua non of activities within the scope ofthe statute.
FinCEN regulations mirror this language regarding acceptance and transmission. The relevant rule statesthat money transmission “means the acceptance of currency, funds, or other value that substitutes forcurrency from one person and the transmission of currency, funds, or other value that substitutes forcurrency to another location or person by any means.” 6 The statutes and regulations are clear that direct
receipt and control of assets are required elements of money transmission. Indeed, this limiting factor isessential, otherwise a wide range of additional services such as internet service providers or postal
carriers could inadvertently be caught in the definition of a money transmitting business since theyroutinely send, receive and process information and messages regarding payments.
1See, e.g., Superseding Indictment, 24-CR-82 (ECF 4) (S.D.N.Y. Apr. 24, 2024); Government’s Opposition toDefendant Roman Storm’s Pretrial Motions, 23-CR-430 (ECF 53) (S.D.N.Y. Apr. 26, 2024).
218 U.S.C. § 1960(a).
3Id. at (b).
431 U.S.C. § 5330(d)(2) (emphasis added).
5Accept, Merriam-Webster, https://www.merriam-webster.com/dictionary/accept.
631 C.F.R. § 1010.100(ff)(5) (emphasis added).

Consequently, non-custodial crypto service providers cannot be classified as money transmitterbusinesses because users of such services retain sole possession and control of their crypto assets. At nopoint when operating or providing non-custodial services do such service providers "accept" crypto assets
from their users. At all times, users retain exclusive custody and control over the private keys to theircrypto assets. All transactions are signed and processed on the user’s local device without third party
access.
Consistent with Congress’ intent, statutory language and existing regulations, FinCEN has consistently
taken this same position in published guidance that non-custodial services are not within the scope ofmoney transmission registration requirements. Over a decade ago, FinCEN published guidance which
explained that activities which “involve neither ‘acceptance’ nor ‘transmission’ of the convertible virtual
currency . . . are not the transmission of funds within the meaning of the Rule.” 7 Additional FinCEN
guidance from 2019 further confirmed that the definition of “money transmitter” is anchored in thecustodial function of the putative registrant with relevant factors including “where the value is stored” and“whether the person acting as an intermediary has total independent control” of the assets. 8 FinCEN
explicitly held that “in so far as the person conducting a transaction through the unhosted wallet is doing
so to purchase goods or services on the user’s own behalf, they are not a money transmitter.” 9Contemporary analysis of this 2019 guidance by law firms clearly establishes this fact as well. 10Consequently, as the primary interpretive authority for the Bank Secrecy Act and Federal moneytransmitting business registration requirements, FinCEN has clearly established that non-custodial crypto
asset software—where the developer or publisher of the software does not have unilateral control of user
assets—are not subject to money transmitting business registration, just like existing internet service
providers are not required to register when routing data packets between a customer and their bank. It isvery concerning that DOJ would adopt an interpretation of this registration requirement that is contrary toanother Federal agency.11 This makes it difficult for ordinary Americans to determine what their legal
obligations are.
This reasoning also comports with common sense. Assets like Bitcoin may be natively digital, but they
are not amorphous such as heat or electricity. Bitcoins have a clear unilateral owner at all times. If a user
wishes to transfer Bitcoin to someone else, they use their private key to sign a transaction which transfers
the Bitcoins to a new address. At no point in the transaction process is there uncertainty over whereownership resides. Custody and control are, therefore, the logical touchstone of where “acceptance” and7

Application of FinCEN Regulations to Virtual Currency Mining Operations, FinCEN Administrative Ruling FIN
2014-R001 (Jan. 30, 2014), at *3.
8Application of FinCEN’s Regulations to Certain Business Models Involving Convertible Virtual Currencies, FIN
2019-G001 (May 9, 2019), at *10, 16 (“a person still qualifies as a money transmitter if that person’s activities
include receiving one form of value (currency, funds, prepaid value, value that substitutes for currency – such asCVC, etc.) from one person and transmitting either the same or a different form of value to another person orlocation…”) (emphasis added).
9Id. at *16.
10
Mike Nonaka, Jenny Konko and Cody Gaffney, FinCEN Issues Guidance to Synthesize Regulatory Framework
forVirtualCurrency,
J.
on
Investment
Compliance,
Nov.
2019,
availableathttps://www.cov.com/-/media/files/corporate/publications/2019/11/fincen-issues-guidance-to-synthesize-regulatoryframework-for-virtual-currency.pdf; Martin Hirschsprung, FinCEN Issues Guidance on Cryptos, Morgan Lewis AllThings FINREG Blog, May 21, 2019, available at https://www.morganlewis.com/blogs/finreg/2019/05/fincenissues-guidance-on-cryptos; Jones Day, Financial Crimes Enforcement Network Consolidates Guidance on VirtualCurrencies, June 2019, available at https://www.jonesday.com/en/insights/2019/06/fincen-consolidates-guidance.
11
Government’s Opposition to Defendant Roman Storm’s Pretrial Motions, 23-CR-430 (ECF 53), at *33 (S.D.N.Y.
Apr. 26, 2024) (“FinCEN Guidance is not a regulation or rule and has no authoritative effect”).

“transmission” occurs on Bitcoin or other crypto networks, just like traditional assets. Analogies to heator data transfer via USB made by the DOJ fundamentally misunderstand how this technology operates.
The DOJ should not diverge from the clear, logically sound, and well-established definition of “moneytransmission” established by FinCEN. Subjecting developers of non-custodial crypto asset software topotential criminal liability as unregistered money transmitters contravenes the well-establishedinterpretation of this provision and will only serve to stifle innovation and shake confidence in the DOJ'srespect for the rule of law.
We urge you to discard this flawed interpretation of Section 1960. Safeguarding the rule of law andnurturing the development of transformative technologies are not mutually exclusive, we expect that theDOJ can chart a wise course that accomplishes both.

Sincerely,

Cynthia M. Lummis
United States Senator

Ron Wyden
United States Senator