Noncustodial Crypto Software and Money Transmission Liability

Summary

This legal advocacy article examines whether developers of autonomous, noncustodial crypto software can be prosecuted as money transmitters when users employ the software for unlawful transactions. It distinguishes publishing code from operating an intermediary that receives and transfers funds, emphasizing control over assets as a key factor in earlier Treasury guidance and cases. The example is Tornado Cash and its developer Roman Storm, whose prosecution the article presents as a departure from that distinction.

The piece also discusses competing interpretations of the federal money-transmission statute, the role of intent in conspiracy charges, and a later Justice Department policy memo. It argues that uncertainty about liability can chill open-source development and criticizes prosecutors for pursuing a broad reading while seeking legislative clarification. Its evidence consists of cited agency guidance, legal arguments, and the status of a particular case; it is not a neutral legal survey or a final judicial determination. Readers should treat its conclusions as the author’s position on an evolving dispute.

Key ideas

• The article distinguishes software publication from an intermediary service that receives and transmits funds.
• It identifies control over users’ crypto assets as a relevant factor in money-transmitter analysis.
• The Storm prosecution is presented as testing whether developers can face liability for autonomous software users’ conduct.
• The article argues that ambiguous liability standards may deter open-source software development.
• Its legal conclusions are advocacy claims about a case whose outcome remained unresolved in the document.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.