Innovation Should Be Encouraged, Not Penalized

The Golden State Killer case, which involved 13 murders, 67 sexual assaults, and 120 burglaries, was solved using Investigative Genetic Genealogy, a technology that combines forensic DNA analysis and genealogical research. This innovative approach has since been used to solve over a thousand cold cases worldwide. However, if lawmakers had overregulated or banned this technology, numerous victims and their families would have been denied justice. This highlights the need to promote innovation, rather than punishing it. In the realm of cryptocurrency, ambiguous rules and enforcement lead to confusion, driving industries underground and offshore, where 'bad actors' can exploit the law and harm the vulnerable. As the District Attorney of Sacramento, with over 25 years of experience holding people accountable for their crimes, I believe it is essential to distinguish between genuine criminals and industries that are caught in the crosshairs of unclear laws. The federal prosecutors' use of 18 U.S.C. Section 1960 to target software developers who have never handled customer funds or operated a traditional business is an example of overreach. This statute was designed to target money-transmitting businesses that skirt licensing requirements, not to criminalize the writing of software. The 'regulation-by-prosecution' approach to crypto development is misguided and chills open-source innovation, pushing many U.S. developers offshore. This not only unfairly saddles some with a criminal conviction but also erodes American technological leadership in the area of financial innovation. The U.S. share of open-source developers has fallen significantly due to a lack of clear rules for software development. Every developer driven overseas is a developer who builds infrastructure beyond the reach of U.S. oversight and law enforcement. This is not a win for public safety; it is a self-inflicted wound. The recent memorandum issued by the United States Department of Justice, 'Ending Regulation-by-Prosecution,' is a step in the right direction, as it makes clear that the DOJ will not enforce pure regulatory violations under Section 1960. However, this is not enough, as prosecutorial guidance can change with administrations and U.S. Attorneys. The American innovation community and the public deserve clarity written into law. The Promoting Innovation in Blockchain Development Act, currently before Congress, deserves serious support, as it restores the original intent of Section 1960 and protects the public from unlicensed financial intermediaries. I am not naive about the existence of bad actors who use digital assets for illicit purposes, and I support robust enforcement against these criminals. However, we must not abandon the distinction between the tool and the criminal who wields it. We do not charge email providers for wire fraud; instead, we identify the actual bad actor, build the case, and prosecute with evidence. Section 1960 remains a powerful instrument against genuine money-transmitting criminals in the digital asset space. It is essential to target the actual criminals and let American innovation breathe. This is what justice demands, and it is what I will continue to fight for.