New stance marks major shift in federal policy, aiming to balance innovation and enforcement in the decentralized finance space
DOJ Declares Code Isn’t a Crime
In a major policy shift welcomed by the crypto community, the U.S. Department of Justice (DOJ) announced that it will no longer pursue charges against software developers who create decentralized platforms—provided there is no criminal intent involved.
- “Merely writing code, without ill-intent, is not a crime,” said Matthew Galeotti, Acting Assistant Attorney General of the DOJ’s criminal division, during a crypto summit in Wyoming.
- The decision marks a notable evolution in the U.S. government’s approach to decentralized finance (DeFi) and open-source crypto development.
Moving Away from Money Transmitter Cases
Until now, some developers faced criminal liability for allegedly failing to register as a money transmitter, similar to traditional services like Western Union or Venmo.
- These rules require know-your-customer (KYC) practices and anti-money laundering (AML) reporting, something DeFi protocols typically cannot enforce due to their decentralized nature.
- The DOJ will now move away from prosecuting these registration failures, recognizing the structural differences between centralized financial services and DeFi tools.
Tornado Cash Case Remains a Flashpoint
The change comes in the wake of the controversial prosecution of Tornado Cash co-founder Roman Storm, whose case became a litmus test for how U.S. law applies to decentralized protocols.
- Storm was convicted of conspiracy to operate an unlicensed money transmitting business, though the jury deadlocked on money laundering and sanctions evasion charges.
- Supporters argue Storm only created the open-source code, without facilitating criminal activity directly.
Political and Regulatory Shifts Behind the Scenes
This DOJ shift reflects broader recalibration across U.S. crypto policy, as the Biden administration steps back from aggressive enforcement seen in recent years.
- The DOJ has disbanded its crypto enforcement team, signaling a de-escalation of prosecutorial focus.
- The Securities and Exchange Commission (SEC), under mounting pressure, has also dropped several high-profile crypto lawsuits in recent months.
A Win for Innovation, With Boundaries
While this shift is seen as a win for developers and innovation, officials emphasize that the absence of malicious intent remains critical. Those who use crypto tools for fraud, evasion, or money laundering will still be pursued.
- This nuanced stance could offer developers more legal clarity while maintaining safeguards against financial crime.
- It also reflects growing recognition that tech neutrality—not punishing the creation of code itself—is key to supporting emerging blockchain ecosystems.
