Justice Department Narrows Money-Transmitter Prosecutions for Decentralized Software
The U.S. Justice Department said new money-transmitter charges would not be approved against third parties when software is truly decentralized, solely automates peer-to-peer transactions, and does not give the third party custody or control over user assets. The policy was directly relevant to Bitcoin wallet and privacy developers.
On August 21, 2025, Acting Assistant Attorney General Matthew Galeotti used a speech in Jackson, Wyoming, to set out a more restrictive Justice Department charging policy for certain digital-asset software developers. Galeotti said prosecutors would not approve new charges under the relevant federal money-transmission provision where software is truly decentralized, merely automates peer-to-peer transactions, and a third party does not have custody or control over users’ assets.
The statement did not create immunity for developers and did not prevent prosecution for fraud, money laundering or knowingly facilitating criminal proceeds. Galeotti emphasized that the Department would continue pursuing bad actors. The change instead addressed the circumstances under which writing and publishing non-custodial software could itself be treated as operating an unlicensed money-transmitting business.
The distinction between custodial and non-custodial software is especially important to Bitcoin. Wallets and privacy tools can allow users to transact without a company taking possession of their coins. Developers had watched prosecutions involving cryptocurrency software closely because expansive money-transmitter theories could create criminal exposure even where users retained control of their own assets.
Historically, the speech was significant because it made prosecutorial policy more explicit after years of legal uncertainty around decentralized financial software. It did not resolve every legal question, but it narrowed one important category of federal charging risk for developers building peer-to-peer, non-custodial systems.