Promoting Innovation, Not Punishing It: A Call to Action

The sudden cessation of the Golden State Killer's crimes in the 1980s remained a mystery for over three decades, until the advent of Investigative Genetic Genealogy (IGG) finally led to the perpetrator's capture. This innovative technology, which combines forensic DNA analysis and genealogical research, has since been instrumental in solving over a thousand cold cases worldwide. However, if lawmakers were to overregulate or ban IGG, countless victims and their families would be denied justice. This scenario highlights the importance of promoting innovation, rather than punishing it. In the realm of cryptocurrency, ambiguous rules and enforcement practices create confusion, stifling growth and driving industries underground. As the District Attorney of Sacramento, I have spent over 25 years holding individuals accountable for their crimes, including gang members, hate crime offenders, and those involved in high-tech crimes. My experience has taught me that clarity in the law is essential for both prosecutors and the public. The distinction between genuine crime and an industry caught in the crosshairs of a law never intended for them is crucial. Federal prosecutors have been misapplying a statute to target software developers who have never handled customer funds or operated a business in the traditional sense. This is not justice, but overreach. The original intent of 18 U.S.C. Section 1960 was to target money-transmitting businesses that skirt licensing requirements, not to criminalize software development. Yet, federal prosecutors have stretched this statute to reach developers of noncustodial, peer-to-peer blockchain technology. Charging them under a statute designed for traditional financial intermediaries is a mistake. The 'regulation-by-prosecution' approach to crypto development fails to provide clarity and chills open-source innovation, driving many U.S. developers offshore. This approach unfairly saddles some with a criminal conviction and erodes American technological leadership in a critical area of financial innovation. The U.S. share of open-source developers has declined significantly due to a lack of clear rules for software development. Every developer chased 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, but a self-inflicted wound. Recently, the United States Department of Justice issued a memorandum entitled 'Ending Regulation-by-Prosecution,' making it clear that the DOJ will not enforce pure regulatory violations under Section 1960. However, this is not enough. 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. I am not naive about the existence of bad actors who use digital assets for illicit purposes. I have prosecuted them, 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 and prosecute them with evidence. Section 1960 remains a powerful instrument against genuine money-transmitting criminals in the digital asset space. Custodial exchanges that knowingly process criminal proceeds, centralized mixers operated to obscure illicit funds, and platforms that flout FinCEN registration while holding customer assets are legitimate targets. The law does not need to be stretched to reach a software developer who wrote a peer-to-peer protocol and never held someone else's money. As a child refugee from Vietnam, I came to this country with nothing but my family and the belief that America rewards hard work and respects the rule of law. The rule of law cuts both ways, protecting communities from violent crime and innovators from overreach. As the head of the second-largest District Attorney's Office in Northern California, I have stood in courtrooms for 25 years, sworn to represent victims, the vulnerable, and the voiceless. I believe that getting this distinction right is a basic obligation of our Federal Government. Section 1960 is a good law that has been misused in relation to those involved in developing truly decentralized finance technology. Fixing the application, targeting actual criminals, and letting American innovation breathe is what justice demands, and that is what I will continue to fight for.