Texas Judge Dismisses Crypto Money Transmitter Laws Suit, DOJ Memo Cited
A Texas federal judge dismissed a preemptive lawsuit by Coin Center fellow Michael Lewellen seeking a ruling that his non-custodial donation software would not violate federal “money transmitter laws.”
Chief Judge Reed O’Connor said Lewellen failed to show a credible, imminent risk of prosecution. The court also distinguished earlier crypto enforcement cases involving Tornado Cash and Samourai Wallet developers, arguing those matters centered on money laundering rather than simply operating a business or running non-custodial tools.
In reaching the decision, the judge relied on a 2025 DOJ memo from Deputy AG Todd Blanche indicating prosecutors would not target certain crypto tools based on users’ end-acts or unwitting regulatory violations. Lewellen argued this guidance was not enough for legal certainty, but the court still found the prosecution threat too speculative to justify relief.
The dismissal was without prejudice, so Lewellen can refile. However, the ruling did not definitively resolve whether non-custodial software falls within money transmitter laws. Coin Center and Lewellen are now pushing Congress to pass the “Blockchain Regulatory Certainty Act of 2026” by Sen. Cynthia Lummis to explicitly exempt non-custodial developers from money transmitter requirements.
Neutral
The ruling reduces near-term legal certainty for non-custodial developers, but it does not eliminate the underlying regulatory ambiguity around money transmitter laws. By dismissing the case for lack of a credible, imminent prosecution threat, the court avoided a definitive interpretation of whether non-custodial software is covered. Short term, traders may see slightly lower headline risk for DeFi compliance narratives given the DOJ memo was cited, but the “without prejudice” status and the unresolved broader question keep uncertainty alive. Long term, the push for the Blockchain Regulatory Certainty Act of 2026 could become a key catalyst; until legislation lands, market impact is likely limited and indirect, so overall price impact on any single major coin is likely neutral.