DOJ Declares: Writing Defi Code Is Not a Crime

Federal prosecutors drop hammer on regulatory overreach—coders breathe sigh of relief as Justice Department draws clear legal line.

Code Is Speech, Not Solicitation

The DOJ's latest guidance cuts through the regulatory fog: developing open-source DeFi protocols doesn't constitute unlawful brokerage activity. No more guessing games for developers building permissionless systems.

Regulatory Thunderclouds Part

This move bypasses years of regulatory ambiguity that kept innovators looking over their shoulders. Suddenly, writing smart contracts looks less like legal Russian roulette—though the SEC will probably still find a way to charge you for breathing too close to a blockchain.

Wall Street's worst nightmare? Talent just got a green light to keep bypassing traditional finance's gravy train.

Debate Over Money Transmission Rules

Regulators have long applied stringent rules to companies in the money remittance business, but the rise of Defi systems is putting those standards to the test.

Traditional payment platforms face clear obligations, while DeFi projects say those same rules don’t make sense in a code-driven environment.

Money transmitters such as PayPal and Cash App must secure licenses and comply with anti-money laundering obligations. They also have to verify customers and report suspicious transactions.

But decentralized exchanges argue these rules don’t fit their model since they have no control over user activity on their platforms.

NEW: US DOJ’S ACTING AAG MATTHEW GALEOTTI SAYS “OUR VIEW IS THAT MERELY WRITING CODE, WITHOUT ILL INTENT, IS NOT A CRIME. INNOVATING NEW WAYS FOR THE ECONOMY TO STORE AND TRANSMIT VALUE AND CREATE WEALTH, WITHOUT ILL INTENT, IS NOT A CRIME”https://t.co/iyGVBr0BCZ

— DEGEN NEWS (@DegenerateNews) August 21, 2025

On Defi, Hiding Money & Ill Intent

The issue came under the spotlight after a New York jury recently convicted Roman Storm, co-founder of Tornado Cash, on conspiracy charges linked to operating an unlicensed money transmitting business.

Tornado Cash is a privacy service specifically designed to make Defi and cryptocurrency transactions more difficult to trace.

Jurors could not reach a decision on whether Storm committed money laundering or violated sanctions.

Prosecutors said the service allowed illicit finance, while critics of the case argued Storm had only written code.

According to Galeotti, future cases in the Defi and crypto space will require proof that a developer knowingly aided fraud, sanctions evasion, or laundering.

“Innovating new ways for the economy to store and transmit value and create wealth, without ill-intent, is not a crime,” he said.

He added that laws banning unlicensed money transmission will not apply to developers unless there is evidence of deliberate wrongdoing.

The focus of the US justices will remain on fraud, Ponzi schemes, and global laundering networks, including those based in China and other countries suspected of carrying out illicit transactions.

Featured image from Getty Images, chart from TradingView