Coin Center’s Advocacy for Cryptocurrency Developers
Coin Center has intensified its support for cryptocurrency developers by emphasizing that the act of publishing software code should be deemed a form of protected speech under the First Amendment of the United States Constitution. On Monday, they released a comprehensive report in which Executive Director Peter Van Valkenburgh and Research Director Lizandro Pieper assert that the writing and dissemination of cryptocurrency code is akin to the publication of a book or recipe, thereby warranting First Amendment protections.
Legal Scrutiny and Developer Rights
This assertion comes at a critical juncture when developers are increasingly under legal scrutiny for how their software is utilized, particularly in light of prominent criminal cases associated with decentralized applications and privacy-enhancing tools. In the report, Coin Center delineates a clear distinction between speech that should be protected and regulatory oversight applicable to specific actions taken by developers.
The authors argued that confusion among lower courts regarding the differentiation between conduct and speech in the context of software publishing has led to the emergence of a so-called functional code theory. This theory suggests that software should be treated more as conduct due to its potential to produce tangible real-world effects. Coin Center contested this perspective, stating that these activities fundamentally represent speech, supported by interpretations of existing Supreme Court jurisprudence, even if some lower court rulings diverge.
Regulatory Scrutiny and Developer Actions
According to Coin Center, developer actions should only fall within regulatory scrutiny when they directly manage user funds, facilitate transactions for users, or make decisions on their behalf. Hence, merely publishing and maintaining code should not invoke licensing or compliance requirements.
“They are speakers and inventors, not agents, custodians, or fiduciaries,”
the report emphasized. Imposing pre-registration or licensing on these activities would not only misinterpret historical financial oversight logic but also impose a prior restraint on free speech, which is typically unconstitutional.
Ongoing Legal Challenges
Coin Center highlighted ongoing legal challenges, such as the conviction of Roman Storm, a developer associated with the Tornado Cash protocol, who faced charges for operating an unlicensed money-transmitting business. His defense argues for dismissal, invoking Supreme Court precedents that indicate he lacked criminal intent. Similarly, developers behind Samourai Wallet were convicted on comparable grounds and received prison sentences of four to five years. These cases have instigated a wave of concern within the developer community regarding the liability associated with open-source coding depending on third-party use.
Legal Precedents and First Amendment Principles
Coin Center’s stance finds its roots in longstanding legal precedents, notably the 1985 Supreme Court decision in Lowe v. SEC, suggesting that disseminating information while not managing client assets constitutes protected speech, distinct from regulated financial activities. Unlike traditional financial systems, which rely on intermediaries to handle user funds, cryptocurrency frameworks often eliminate such roles, enabling direct peer-to-peer transactions and self-custody without centralized oversight.
Conclusion
In their conclusion, Van Valkenburgh and Pieper reiterated that applying regulations meant for intermediaries to software developers merely for the sake of administrative ease risks overextending legal boundaries. They argued that cryptocurrency technology does not warrant the creation of new legal concepts; rather, it requires the straightforward application of established First Amendment principles to fit new technological environments. Thus, as software becomes the dominant medium for expressing thoughts and facilitating economic activities, these principles take on even greater significance.
“The act of writing and sharing code is a form of speech. In a free society, speech ought not to be silenced through licensing,”
they asserted.
