The money transmitter definition that has governed American crypto regulation for a decade now has sentencing data attached to it. Keonne Rodriguez, co-founder of Samourai Wallet, received five years in federal prison on 6 November 2025; co-founder William Lonergan Hill received four years on 19 November 2025. Each was ordered to pay a $250,000 fine. Together they paid $6,367,139.69 in forfeiture, representing fees Samourai earned, in partial satisfaction of a forfeiture order totalling $237,832,360.55.
The convictions advanced a prosecution theory the industry has spent two years fighting: that writing and maintaining non-custodial software can constitute operating an unlicensed money transmitting business under 18 U.S.C. Section 1960, even without ever holding a user’s funds.
What the money transmitter definition actually covers
A money transmitter, under the working federal definition, accepts currency, funds, or value that substitutes for currency from one person and transmits it to another location or person by any means. FinCEN’s 2013 guidance pulled crypto inside that perimeter: exchanges, custodial wallets, payment processors, and kiosk operators have been regulated money services businesses (MSBs) ever since, with full Bank Secrecy Act obligations and 49-state licensing requirements to match.
None of that is contested. The industry litigates many things; the proposition that an exchange holding customer funds is a regulated transmitter is not one of them.
The dispute is at the other edge. According to the Money Laundering Watch analysis of the Samourai indictment, the government alleged the service facilitated more than $2 billion in Bitcoin transactions in total, including $237 million in criminal proceeds, and charged the developers under both Section 1960 (unlicensed money transmission) and Section 1956 (money laundering). Tornado Cash, by contrast, was pursued primarily through OFAC’s sanctions authority under IEEPA, making the two cases legally distinct despite their surface similarity.
The Brady letter the SDNY ignored
The most uncomfortable detail in the Samourai prosecution is what prosecutors knew before filing charges. According to the Bitcoin Policy Institute, a Brady letter filed by defence counsel revealed that six months before the 2024 indictment, SDNY prosecutors asked FinCEN directly whether Samourai’s non-custodial wallet and coinjoin software constituted money transmission. FinCEN’s reply was an emphatic no.
Prosecutors charged Rodriguez and Hill anyway. That sequence is why the money transmitter definition remains genuinely contested: the statutory text, the 2019 FinCEN guidance that pointed toward a custody-based test, and FinCEN’s own case-specific answer all cut against the government’s theory, yet the DOJ SDNY superseding indictment proceeded under a broader reading, alleging the conspiracy ran from at least 2015 through February 2024.
Section 604 and the statutory answer
Congress is now attempting to codify the custody line in statute. Section 604 of the CLARITY Act, formally titled the Blockchain Regulatory Certainty Act and appearing within Title VI of H.R.3633, defines a “developer or provider” as any person or business that creates or publishes software to facilitate the creation of, or provide maintenance to, a distributed ledger or a service associated with a distributed ledger. Developers fitting that definition, whose software never takes independent control of user funds, would not qualify as money transmitters under the Bank Secrecy Act.
On 12 January 2026, Senator Cynthia Lummis (R-WY) and Senator Ron Wyden (D-OR) introduced a standalone version of the Blockchain Regulatory Certainty Act (BRCA) of 2026, separate from the broader CLARITY vehicle, according to the DeFi Education Fund. The standalone introduction signals that the provision’s sponsors are willing to advance it on its own timeline if the larger bill stalls.
The opposition has been shifting. The National District Attorneys Association remains against the provision, arguing it would sever liability connections between protocol developers and the financial activity their code enables. The Fraternal Order of Police, however, reversed its earlier opposition and wrote a letter supporting the CLARITY Act in July 2025, according to the Paul Hastings crypto policy tracker. That reversal narrows the institutional law-enforcement bloc opposing the provision, even as prosecutors’ associations hold firm.
Section 604 does not touch custodial businesses. Exchanges, hosted wallets, and payment processors keep every BSA obligation. The provision addresses only whether non-custodial software developers can be drafted into money-transmitter status for publishing code they never use to hold funds.
The practical stakes are straightforward. If Section 604 passes as drafted, the prosecution theory used in the Samourai case is foreclosed by statute. If it is narrowed through carve-backs targeting mixers, front-end operators, or profiting maintainers, the boundary of a federal felony will remain a matter of prosecutorial discretion. Rodriguez and Hill, currently serving their sentences, are the data point the negotiators are working around.
