Cynthia Lummis: DOJ “Hyper-Aggressive” Crypto Stance Violating Rule of Law, Threatens What It Means to Be American

Key Takeaways

• Cynthia Lummis criticizes DOJ’s stance on non-custodial wallets, calling them overly aggressive and damaging with American values.
• Coin Center has challenged the  assertion that businesses do not need to control funds.
• Lummis-Gillibrand bill targets stablecoins, pushing for crypto regulation clarity.

Republican Senator Cynthia Lummis has reacted to the US Department of Justice (DOJ)’s latest stance on non-custodial software. She claims the department is overly aggressive, breaks the rule of law, and threatens property rights “core to being an American”.

Her comments come after the DOJ’s response to a motion to dismiss filed by crypto mixer Tornado Cash developer Roman Storm Tornado Cash.

Lummis Defends Property Rights in Cryptographic Keys

On May 1, 2024, Senator Lummis, a strong supporter of cryptocurrency, voiced her concerns about the Biden administration’s Department of Justice (DOJ) position on non-custodial wallet software. She said :

“I am deeply troubled by the Department of Justice’s hyper-aggressive argument that non-custodial software can constitute a money transmission service. This stance contradicts existing Treasury guidance, common sense and violates the rule of law.”

Lummis further explained that the DOJ’s stance on self-custody software endangers essential property rights. She emphasized her commitment to defending the right of individuals to manage their own cryptographic keys and operate their own nodes. The Wyoming Senator went saw far as to claim these were “fundamental” rights “core to being an American”.

DOJ and Coin Center Clash Over Interpretations of Crypto Regulation

A significant aspect of the Department of Justice’s (DOJ) court filing asserts that according to Section 18 of the United States Code, a business is not required to have control over the funds. This interpretation, however, is contested by Coin Center, a non-profit organization focused on cryptocurrency policy advocacy.

Peter Van Valkenburgh, director of research at Coin Center, has expressed a contrary view in a recent blog post. He points out that definitions from the Financial Crimes Enforcement Network (FinCEN) and other regulatory bodies directly contradict the DOJ’s stance, suggesting a more stringent requirement for businesses to oversee the funds they handle.

This disagreement highlights the ongoing debate and complexity surrounding the regulation of cryptocurrencies and their compliance with existing financial laws.

Lawmakers Accelerate Crypto Regulation Efforts as Elections Loom

As both the US and the UK approach critical elections this autumn, lawmakers are intensifying efforts to advance cryptocurrency regulation amid political uncertainty.

In the US, Senators Cynthia Lummis and Kirsten Gillibrand proposed a new bill, specifically targeting stablecoin regulations. This legislative push coincides with the UK’s proactive approach. There, Economic Secretary to the Treasury, Bim Afolami, emphasized the government was moving to present its own crypto legislation before the parliamentary summer recess.

The recent Senate bill on stablecoins marks yet another collaboration between Lummis and Gillibrand in the realm of crypto regulation. Their partnership began with the introduction of the Responsible Financial Innovation Act in 2022. Following the FTX crisis, they revised and reintroduced this act in 2023 to include amendments focusing on consumer protection.

Despite the endorsement of prominent industry figures, the Lummis-Gillibrand crypto bill has struggled to garner substantial support within the Senate. Prominent Democrats such as Elizabeth Warren and Sherod Brown maintain a stringent stance on cryptocurrency. As a result, the bills progress faces significant challenges.