The bill amends 18 U.S.C. §1960(a) by inserting language that makes “exercis[ing] control over currency, funds, or other value that substitutes for currency” an explicit basis for criminal liability under the statute. The statute currently targets persons who operate unlicensed money-transmitting businesses; this change adds a separate, broader predicate action before the existing conduct-based list of verbs.
The practical effect is to broaden the class of actors who can be prosecuted under §1960 to include various participants in cryptocurrency and digital-asset systems whose role gives them control over funds — potentially custodians, key-holders, gatekeepers of smart-contract administrative keys, and operators of certain services that touch tokens used as money. The amendment raises immediate questions about legal scope, mens rea, and whether routine technical or governance functions could attract felony exposure without clearer statutory or regulatory guidance.
At a Glance
What It Does
The bill inserts an additional predicate verb into §1960(a): it makes ‘‘exercises control over currency, funds, or other value that substitutes for currency’’ a basis for prosecution alongside conduct such as ‘‘conducts, controls, manages’’ an unlicensed money-transmitting business. It does not change §1960’s penalty structure or add new registration requirements.
Who It Affects
Actors who hold or can direct access to other people’s funds — custodial wallet providers, centralized exchanges, custodial services, administrators of token bridges or smart-contract keys, and some DeFi protocol administrators — face expanded criminal exposure. It could also sweep in developers or operators with the technical ability to move funds if prosecutors read ‘‘exercises control’’ broadly.
Why It Matters
This amendment attempts to bring a wider set of digital-asset activities within a money-transmission criminal statute rather than relying solely on administrative banking or FinCEN rules. That shift matters for product design, compliance programs, and risk assessment because criminal liability can attach to operational roles that previously were treated as regulatory compliance issues.
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What This Bill Actually Does
Section 1960 currently criminalizes the operation of an unlicensed money-transmitting business — essentially targeting businesses that transmit money for others without meeting federal registration and reporting requirements. The bill does not replace that framework; instead, it adds a new way to fall within §1960’s reach by making ‘‘exercis[ing] control over currency, funds, or other value that substitutes for currency’’ part of the statute’s opening clause.
By inserting that phrase directly after ‘‘Whoever knowingly,’’ the amendment ties the mens rea element (the statute’s ‘‘knowing’’ requirement) to anyone who exercises control over value used as money. The statutory phrase ‘‘other value that substitutes for currency’’ is broad and typically interpreted to include digital tokens, stablecoins, and other crypto-assets functioning as mediums of exchange.
Because the bill leaves the existing list of verbs (conducts, controls, manages, supervises, directs, or owns) intact, prosecutors could proceed under either the traditional unlicensed-MS B theory or the new ‘‘exercise control’’ theory.That broadened predicate creates practical ambiguity. What counts as ‘‘exercise of control’’?
Is a developer who deploys an upgrade that changes funds’ routing ‘‘exercising control’’? Is a validator or node operator who technically can censor transactions similarly exposed?
The bill offers no definitions or exemptions for core civic functions like running a node, writing open-source code, or participating in protocol governance. Those gaps mean companies will need to reassess when operational acts convert into potential criminal exposure, while legal challenges and regulatory guidance will likely follow.Finally, because the amendment does not amend penalty or registration provisions, the enforcement mechanism remains criminal prosecution under §1960’s existing sanctions.
Practically, the change pushes conduct that regulators historically treated as compliance or licensing issues into a criminal context when the actor’s role is described as exercising control over value that substitutes for currency.
The Five Things You Need to Know
The bill inserts the phrase ‘‘exercises control over currency, funds, or other value that substitutes for currency’’ into 18 U.S.C. §1960(a) immediately after ‘‘Whoever knowingly.’, The added language explicitly targets value beyond fiat by naming ‘‘other value that substitutes for currency,’’ a phrase that can encompass cryptocurrencies, stablecoins, and other digital assets used as mediums of exchange.
The amendment does not alter §1960’s penalties or add registration requirements — it creates an additional basis for criminal liability under the existing statutory framework.
Because the new predicate is unqualified and undefined, ordinary technical or governance roles (developers, custodians, key‑holders, bridge operators) could become targets depending on prosecutorial interpretation.
The bill leaves intact the statute’s mens rea term ‘‘knowingly,’’ but attaches it to ‘‘exercises control,’’ raising immediate questions about how much awareness or intent is required to trigger criminal liability.
Section-by-Section Breakdown
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Short title
Provides the act’s short title, “Promoting Innovation in Blockchain Development Act.” This is purely formal and does not affect substantive law or implementation; it frames the amendment as pro-innovation despite the change’s substantive criminal-law effect.
Text amendment to 18 U.S.C. §1960(a)
Inserts new language after ‘‘Whoever knowingly’’ so that ‘‘exercises control over currency, funds, or other value that substitutes for currency’’ becomes a predicate action for liability. Mechanically, that expands the range of conduct captured at the statute’s entry point — turning previously neutral or technical acts of control into potential predicates for prosecution under the same provisions that address unlicensed money‑transmitting businesses.
How prosecutors and courts will have to interpret the new predicate
Because the bill provides no definition for ‘‘exercises control’’ or ‘‘other value that substitutes for currency,’’ enforcement will depend on prosecutorial charging decisions and subsequent judicial interpretation. Courts will confront questions about what degree of authority or capability constitutes ‘‘control,’’ whether temporary or indirect control suffices, and how the statutory ‘‘knowingly’’ mens rea applies to complex technical roles. Defense and compliance strategies will depend heavily on early enforcement actions or Department of Justice/FinCEN guidance.
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Explore Finance in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Federal prosecutors and law enforcement — gain a broader statutory hook to charge actors who move or control digital assets without a license, simplifying prosecutions where regulatory definitions lag technology.
- Regulated money services businesses and banks — may benefit from reduced competitive pressure by bringing more custodial and transmission activity under criminal scrutiny when done outside the regulated system.
- Victims of theft or fraud involving digital assets — could see an expanded set of actors subject to criminal liability when those actors exercise control that facilitates loss or evasion of reporting obligations.
Who Bears the Cost
- Custodial crypto firms and centralized exchanges — face increased criminal risk if they or certain employees ‘‘exercise control’’ over users’ funds without formal licensing, raising compliance costs and potential criminal exposure.
- Open-source developers, protocol maintainers, and node operators — could face ambiguous criminal risk for technical acts that give them the ability to move or direct funds, chilling maintenance and innovation.
- Startups and small service providers — will need to invest in legal and compliance resources to assess whether ordinary operations create §1960 exposure, increasing barriers to entry; defense costs will rise if prosecutions are brought while law develops further.
Key Issues
The Core Tension
The bill seeks to close enforcement gaps by giving prosecutors a broader tool to target unregulated transmission of non‑fiat value, but doing so through sweeping criminal language risks criminalizing routine technical and governance roles in blockchain ecosystems; the central dilemma is protecting the financial system from unlicensed, harmful transmission without chilling legitimate development and operations that underpin innovation.
Two implementation problems dominate. First, the bill uses broad, undefined language that creates immediate vagueness risks. ‘‘Exercises control’’ can describe a spectrum of activity from full custody of user funds to the mere technical ability to influence a system.
Without statutory or regulatory markers, operators cannot reliably design around criminal exposure; courts will need to parse technological nuances the statute does not address.
Second, the change collapses regulatory and criminal responses. Historically, FinCEN rules, state money-transmitter licensing, and administrative enforcement have handled unlicensed transmission and anti‑money‑laundering failures.
This amendment adds a criminal tack that could punish non‑business or quasi‑technical actors whose conduct regulators might otherwise treat as regulatory compliance issues. That creates risk of selective enforcement, conflicts with agency-led enforcement priorities, and possible chilling of activities that are socially valuable (open-source development, decentralized validation).
Both problems point to the need for prompt interpretive guidance from DOJ and FinCEN or follow-up statutory clarifications to define thresholds for ‘‘control’’ and to exclude benign technical functions.
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