The cryptocurrency advocacy group Coin Center has published a report arguing that writing and publishing software code constitutes free speech protected by the First Amendment. The report contends developers should be shielded from liability unless they directly control user assets, drawing a line between protected speech and regulatable financial conduct. This comes amid ongoing legal uncertainty for developers following several high-profile convictions last year.
Cryptocurrency developers are seeking stronger legal protections as uncertainty grows over their potential liability for how their software is used. In a new report, Coin Center researchers argue that publishing code is a form of protected speech akin to writing a book.
The report states that the First Amendment offers strict constitutional protection for developers who only publish and maintain software. “They are speakers and inventors, not agents, custodians, or fiduciaries,” the authors wrote.
The legal framework aims to help courts distinguish between protected software publication and a developer’s professional conduct. The authors argue regulation applies when a developer controls user assets or executes transactions on their behalf.
They warn against what they call a “functional code theory of diminished First Amendment protection” emerging in some courts. “Some courts have suggested that because software can be executed to produce real-world effects, it resembles conduct rather than speech,” the report noted.
The analysis cites the 1985 Supreme Court case Lowe v. SEC as precedent for this speech protection. In that case, the Court found a publisher not holding client assets or acting on their behalf was protected by free speech.
The challenge arises because crypto software often eliminates traditional financial intermediaries subject to licensing. The report argues regulators cannot invent new middlemen for administrative convenience.
“Crypto software does not necessitate the invention of new legal doctrines or novel carveouts,” the authors stated. They believe applying settled First Amendment principles is sufficient for this new technological context.
Several developers face serious legal consequences based on this unresolved distinction. Roman Storm, developer of Tornado Cash, was convicted last year on conspiracy charges related to operating an unlicensed money-transmitting business.
The co-founders of the privacy-focused Samourai Wallet were also found guilty on similar charges. They received prison sentences ranging between four and five years.
