Court dodges crypto software ruling
A Texas federal court declined to decide whether non‑custodial crypto software is a money‑transmitter, dismissing a developer's suit for lack of imminent enforcement — regulatory ambiguity for crypto devs persists. That legal gray area keeps compliance strategy top-of-mind for fintech sellers and integrators. (banklesstimes.com)
Michael Lewellen, a Coin Center fellow, filed the complaint on Jan. 16, 2025 seeking preemptive clarity for his non‑custodial crowdfunding tool Pharos. (cointelegraph.com) Chief U.S. District Judge Reed O'Connor referenced the Justice Department’s April 7, 2025 memorandum “Ending Regulation By Prosecution” while concluding Lewellen had not shown a substantial threat of prosecution. (theblock.co) The lawsuit attracted amicus support from industry groups including the Blockchain Association, the Crypto Council for Innovation and the DeFi Education Fund. (theblock.co) Deputy Attorney General Todd Blanche’s April 7, 2025 memo instructs prosecutors to stop using criminal prosecutions to “superimpose regulatory frameworks” on digital assets and directed the disbanding of the National Cryptocurrency Enforcement Team (NCET). (justice.gov) Senators Cynthia Lummis and Ron Wyden introduced the bipartisan Blockchain Regulatory Certainty Act (S.3611) on Jan. 12, 2026 to clarify that non‑controlling developers who never take custody of user funds are not money transmitters under federal law. (congress.gov) Coin Center’s Peter Van Valkenburgh and Lewellen have urged Congress to pass the BRCA as an explicit legislative safeguard for open‑source and non‑custodial developers. (unchainedcrypto.com) The court entered its judgment without prejudice, leaving Lewellen able to refile if enforcement or factual circumstances change. (decrypt.co)
