Key Takeaways:
- An official from the U.S. Department of Justice (DOJ) said that developers will not face penalties for writing code without criminal intent.
- Neutral DeFi protocols are not responsible for third-party misuse, but bad actors will face prosecution.
- The Trump administration’s policy adjustment attempts to provide clarity while also supporting innovation.
The U.S. Department of Justice (DOJ) is aiming to draw a clear line between innovation and criminal activity in the digital asset industry, assuring developers that merely writing code will not expose them to prosecution.
According to Matthew R. Galeotti, who serves as the Acting Assistant Attorney General of the Criminal Division, he said this about developers at the American Innovation Project Summit in Jackson, Wyoming –
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.
Galeotti is responsible for enforcing criminal laws and protecting victims in cases from drugs and violent crime to hacking, fraud, and money laundering. He currently supervises more than 1,100 federal prosecutors and staff members under the DOJ. The remarks made by the Acting Assistant Attorney General come after years of uncertainty about whether developers of decentralized finance (DeFi) protocols can be held liable for unlicensed money transactions.
According to the DOJ official, prosecutors will not arrest developers of Defi protocols that are involved in money laundering or illicit financing unless they show criminal intent. Neutral developers would not be held liable for a third party using their platform. But bad actors who commit fraud, money laundering, or exploit smart contracts will face prosecution.
The announcement follows concerns after Tornado Cash co-founder Roman Storm was convicted for operating an unlicensed money business, despite claims he only wrote code.
Shift in DOJ’s Approach
DOJ’s updated stance under the Trump administration, which had previously disbanded the DOJ’s dedicated crypto enforcement team, ensures developers will be treated based on their intent rather than technical classification, which will also ensure innovation is not being stifled.
Still, Galeotti underscored that fraud, Ponzi schemes, laundering networks, and hacks will remain priorities for enforcement. “Those with criminal intent may be liable for money laundering or the underlying unlawful activity,” he said.
Crypto advocacy groups welcomed the clarification, saying it gives developers much-needed clarity and helps distinguish between good-faith innovation and deliberate exploitation. However, anti-money laundering advocates warned that privacy and DeFi protocols can still enable large-scale criminal activity if left unchecked.
For now, the DOJ’s message is clear: developers acting in good faith should not fear prosecution, but bad actors misusing digital assets will continue to face full legal consequences.
