Warren’s corruption alarms and builders’ “don’t criminalize code” plea both point to the same fix: a functional perimeter for crypto.
By CryptoCaster Opinion Desk — September 6, 2025
In a rare moment of strange-bedfellow alignment, Senator Elizabeth Warren and large swaths of the crypto industry are both blasting a key Trump-era crypto package—but for opposite reasons. Warren warns of corruption and weak safeguards; builders warn that sloppy legal definitions could still treat software authors like money transmitters. They’re both pointing at the same flaw: Congress keeps writing around code instead of legislating for it.
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The backdrop matters. In July, President Trump signed the GENIUS Act, the first federal stablecoin law—historic, yes, but narrow. It set reserve and supervision rules for payment stablecoins, not a full market-structure rewrite. Warren calls it a “handout” that could enrich the president’s own crypto orbit; industry groups, meanwhile, are focused on the unfinished business: clear boundaries for who is a financial intermediary and what counts as “transmitting money” in a world where protocols run themselves.
Last month the Justice Department nudged reality closer to common sense, signaling it will not treat mere code writing as a crime absent criminal intent—an overdue course correction after years of cases that blurred the line between publishing software and operating a financial service. But policy memos can be reversed. Congress must codify the principle. Developers who write and publish code are not money transmitters. Period.
CryptoCaster Quick Check:
What everyone is getting right—and wrong
- Warren’s warning has merit. If crypto law ignores conflicts of interest and AML duties, it invites grift. The stablecoin framework should not become a superhighway for political self-dealing or sanctions evasion. Warren’s critique—that consumer and national-security guardrails were watered down—deserves a real answer in any follow-on market-structure bill.
- Builders’ defense of code is essential. Treating open-source developers as financial institutions collapses free speech, research, and innovation into the same bucket as custodians and broker-dealers. Industry letters to lawmakers, and the DOJ’s recent stance, converge on a simple point: intent and control matter. If you don’t custody user funds, set withdrawal policies, or intermediate counterparties, you aren’t “transmitting” money just because your code can be used for it.
Both sides are talking past each other because Congress keeps trying to regulate outcomes (fraud, hacks, illicit finance) using identity (dev vs. company) rather than function (custody, control, commercialization).
Draw the bright lines
A sensible, rights-respecting market-structure bill can satisfy both camps by legislating these four bright lines:
- Speech vs. service. Publishing, forking, or auditing code is speech. Operating a business that takes possession of customer assets or matches trades for compensation is a regulated service. The law should say so explicitly. (The DOJ’s policy shift helps, but it’s not statute.)
- Control test for “money transmission.” Adopt a clear, technology-neutral control test: if an entity can unilaterally freeze, redirect, or reassign user value (or can change those abilities via upgrade keys it alone controls), it’s in scope; if not, it isn’t. This protects truly non-custodial software while keeping custodial “front ends” and hosted wallets inside AML/KYC. (Warren wins on AML; builders win on code freedom.)
- Safe harbor for neutral interfaces. If a front end is open-source, non-custodial, and doesn’t charge variable fees tied to flow, grant a safe harbor so long as it posts prominent risk disclosures and routes sanction-listed addresses to on-chain blocking libraries. (Yes, on-chain compliance is imperfect; it’s still better than criminalizing interfaces.)
- Conflict-of-interest firewall. Borrow from securities law: require enhanced disclosures, recusal rules, and cooling-off periods for public officials and their families who hold, issue, or profit from digital assets likely to be affected by pending regulation. This directly answers Warren’s “crypto cash machine” critique without smothering the sector.
The cost of getting it wrong
When law is fuzzy, prosecutors fill the vacuum. We’ve already seen developers prosecuted under money-transmitter theories even where user control was minimal or nonexistent; some pled to avoid mandatory-minimum exposure. The result is policy by indictment, which chills good-faith research and funnels talent offshore while doing little to stop actual thieves. The DOJ’s August reset is welcome; Congress must make it durable.
On the other side, waving away AML is a fantasy. The U.S. can uphold free expression and demand licensed intermediaries implement sanctions and anti-fraud controls. That’s what the GENIUS Act did for stablecoins—full reserves, audits, examiners—albeit in a narrow lane. Now lawmakers need to finish the job for exchanges, brokers, and market structure without making coders the collateral damage.
What a good bill would look like (checklist)
- Statutory dev safe harbor (speech ≠ service) with a precise, custody-based money-transmitter definition.
- Function-based perimeter: custody, order-matching for comp, or fee-taking intermediaries register and run AML programs; pure software doesn’t.
- On-chain compliance rails recognized in law (attestation standards, oracle frameworks) so neutral tools can integrate sanctions screens without deputizing creators as cops.
- Public-official COI guardrails to rebuild trust.
- Sunset + GAO review after 24 months to measure illicit-finance outcomes, consumer harm, and innovation flight—and recalibrate.
Bottom line
Warren is right to demand anti-corruption and AML rigor. Builders are right that writing code ≠ running a money-services business. Congress should stop making them choose. Lock in the DOJ’s common-sense shift, draw functional lines around real intermediaries, and prove the United States can protect both civil liberties and market integrity in the age of programmable finance.
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