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Most old-timers can quickly understand why crypto lobbying groups would want software developer protections in the crypto market structure bill, but for those unfamiliar, it's worth taking a close look at what happened with Tornado Cash developers. 

A little memory refresher for old-timers and insights for the new folks:

Shortly after the U.S. sanctions on Tornado Cash were imposed by the Office of Foreign Assets Control (OFAC) on August 8, 2022, for allegedly facilitating the laundering of over $7 billion in cryptocurrency since 2019, including $455 million stolen by North Korea’s Lazarus Group, Alexey Pertsev, one of three co-founders of the cryptocurrency mixer was arrested by Dutch authorities on suspicion of facilitating money laundering through Tornado Cash. 

In May 2024, he was convicted and sentenced to 5 years and 4 months in prison for laundering over $1.2 billion in cryptocurrency.   As of February 2025, Pertsev was released from prison under electronic monitoring to prepare for his appeal.  

A year later, Roman Storm, the second co-founder of Tornado Cash was arrested on August 23, 2023, in Washington State, USA.

Charged with conspiracy to commit money laundering, sanctions violations, and operating an unlicensed money-transmitting business of which he pleaded not guilty to all charges. As of the time of writing, he's reported to have been released on a $2 million bond, under house arrest with travel restrictions. 

The last of the three co-founders is believed to be in Dubai and remains at large whilst facing similar charges. 

Now, if you look over again on what Roman Storm is being charged for, you'd have noticed the line alleging that Roman ran an “unlicensed money-transmitting business” when in fact, all he did was co-develop open-source code that allowed individuals access some sort of financial privacy. 

Since when did privacy become a crime? 

Whether or not these individuals personally laundered money I think is not important because that isn't something provable, currently, as reports I've found reveals that charges are mostly just based on the roles they played in developing and releasing open-source code. 

Anyone can come to this conclusion because on November 27, 2024, a U.S. appeals court overturned the sanctions placed on Tornado Cash, ruling that OFAC exceeded its authority by targeting open-source code and developers not directly involved in criminal activity.

### Software Developers Protection 

>The largest US crypto lobbying groups have asked lawmakers to include protections for software developers and infrastructure providers in a bill aiming to regulate the crypto space.

>A joint statement on June 5 by the DeFi Education Fund, Coin Center, the Solana Policy Institute, The Digital Chamber, Blockchain Association, Crypto Council for Innovation, and the Bitcoin Policy Institute requested an additional bill be tacked on to a crypto market structure bill.

>The group urged lawmakers to add the Blockchain Regulatory Certainty Act (BRCA), exempting software developers of non-custodial crypto platforms from being classified as money transmitters, to the Digital Asset Market Clarity (CLARITY) Act of 2025.

Every regulatory easing the cryptocurrency ecosystem gets right now is due to the benefits that are present for the current administration and nothing much else. 

Certainly, everyone expects that this could spiral out of control at some point but I would imagine that the government believes that they have a kill switch that can roll it all back when needed. 

They will be surprised how wrong they are. 

When it comes to the case of Tornado Cash, what is being attacked by the government is our freedom of privacy. In any form that the government may attempt to discuss its regulation of this technology as positive for its citizens, it would be lying because the only persons that would benefit from restricting the rights people should have to keeping their finances private would be the government. 

If being able to transact in private wasn't going to mean that the government would directly lose money, they wouldn't give a shit, even if that privacy would enable others to easily steal from you and get away with it. 

The government commits far more fraud than the citizens. Absolute power corrupts, absolutely right? 

Investors or consumer protections are comical excuses when you consider that the government has an embarrassing 2.7% recovery rate on what consumers lose to fraud annually despite all its regulations. 

>In 2024, U.S. consumers reported losing over $12.5 billion to fraud, marking a 25% increase from the previous year.   However, the actual amount recovered and returned to victims was significantly lower.  

>Reported Consumer Fraud Losses: $12.5 billion, Refunds Returned by FTC: $337.3 million, Recovery Rate: ~2.7% of losses 

>This means that for every dollar lost to fraud in 2024, approximately 2.7 cents were returned to victims through FTC-administered programs. — [GPT excerpt from reports](https://www.ftc.gov/news-events/news/press-releases/2025/03/new-ftc-data-show-big-jump-reported-losses-fraud-125-billion-2024) 

When we look at the crypto market structure bill specific, when the word “investor protection” is mentioned, what's specifically being targeted is exchanges where they are demanded to segregate customer funds from their own and disclose any potential conflicts of interest.

Whilst reasonable, if we circle back to open-source code developers being targeted, where smart contracts are specifically what is being sanctioned, we find that what the government is trying to regulate(restrict) can aid enforce rules that stops exchanges from misusing users funds without centralized oversight through on-chain smart contracts.

That said, considering that most reported losses to fraud in the crypto world are hacks, which means that with more investment into security and crypto education, losses would drop drastically. 

Things like investor or consumer protections do not need government regulations, smart contracts can pretty much handle that, we just need to invest more into crypto education for normies to understand what to look out for. 

At the end of the day, whether or not software developers gain some protection, eventually, especially with artificial intelligence in the mix, it will be difficult to regulate the release and use of open-source software. 

Privacy tech will get better. Security will get better. Crypto will become unstoppable by traditional means. 

Government’s centralized control over citizens' finances will drop drastically. It's to be expected because future economies will be built on-chain, traditional governance grip on the finances of world economic participants will be lost and replaced by decentralized networks, wherein building solutions and essentially a world that serves the greater good would be easier to enforce. 


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