Top leaders of the U.S. Senate Judiciary Committee are urging the Senate Banking Committee to strip language protecting software developers from the bipartisan crypto market structure bill, arguing the provisions would undermine anti-money laundering (AML) enforcement.
In a letter sent late Wednesday to Senate Banking Committee leadership, Senators Dick Durbin (D-Ill.) and Chuck Grassley (R-Iowa) argued that Section 604 modeled after the Blockchain Regulatory Certainty Act encroaches on the Judiciary Committee’s jurisdiction over criminal law.
“The Senate Judiciary Committee which has jurisdiction over Title 18 was not consulted or given the opportunity to meaningfully review the proposed changes in advance,” the senators wrote. “Accordingly, we urge the Committee to reject any proposed language, including Section 604, which would weaken the government’s ability to hold culpable actors accountable for operating unlicensed money transmitting businesses,”
The disputed provision seeks to exempt “non-controlling” software developers and network validators from being classified as financial institutions. Proponents like Senator Cynthia Lummis (R-Wyo.) and Senator Ron Wyden (D-Ore.) argue this is essential to protect code writers who do not custody user funds.
However, Durbin and Grassley cited the Department of Justice’s prosecution of Tornado Cash developer Roman Storm as evidence that current statutes are necessary. They warned that the proposed exemption could effectively immunize developers who knowingly facilitate illicit finance, creating a “loophole” for bad actors.
Senator Cynthia Lummis (@SenLummis): “Blockchain developers who have simply written code and maintain open-source infrastructure have lived under threat… for far too long. This designation makes no sense when they never touch, control, or have access to user funds.” – Source:https://www.lummis.senate.gov/press-releases/lummis-wyden-introduce-bipartisan-legislation-to-protect-blockchain-developers-from-money-transmitter-requirements/
Source:https://www.theblock.co/post/386034/crypto-legislation-pushback-senate-judiciary-committee-leadership-software-developer-protection