Why the Samourai case and WoS’s return to the USA could change the American Bitcoin ecosystem.
On May 17th, Wallet of Satoshi (“WoS“), the wallet software designed to operate on Bitcoin’s Lightning network, announced on its X account its return to the US market with what will be a non-custodial solution “approved” in the United States. Given that it is not known what exactly is meant by “approved,” the news, if confirmed in facts, could have important implications for the Bitcoin ecosystem in the country, especially in terms of privacy, officializing a significant change in the relationship between service providers and regulators. A relationship that in recent years has been marked by deep tensions, especially for those providers that use cryptography to guarantee user privacy and sovereignty and which had reached its peak in April of last year, with the arrest of Samourai Wallet founders for aiding money laundering and operating an unlicensed money transmission business1.
In the days immediately following the arrest, an FBI statement urged American citizens not to use services that were not authorized to operate as money transmitters (or money service businesses), in apparent contrast with the guidelines offered by the Financial Crimes Enforcement Network (“FinCEN2“) regarding the criteria, indeed not too clear, of §1960 of the American penal code, dedicated precisely to unlicensed money transmission activity3. This had raised some legitimate concern for industry operators, for whom regulatory pressure is an ineliminable quota.
The announcement of this return of WoS to the United States comes in a context where the policies promoted by President Donald Trump seem to be able to open a glimmer after the almost persecutory crackdowns endorsed by the Biden administration. Whether this will exhaust itself in political skirmishes or lead to concrete benefits for the ecosystem is still all to be written, but what is certain is that the greatest threat, at this moment, derives today from the risks of a distorted interpretation by the Department of Justice (“DoJ“) of §1960 and from the precedents that could derive from it in the absence of clear regulation. §1960 is, in fact, a powerful and dangerous legal instrument, because after the Patriot Act the requirements for establishing who is subject to licensing are so complicated and confused that the DoJ does pretty much as it pleases and, therefore, is perfectly capable of initiating insidious lawsuits that could create dangerous precedents.
But let’s take a step back. On April 7th of this year, the deputy attorney general in the Trump administration, Todd Blanche, issued a memorandum titled “Ending Regulation by Prosecution,” in which:
- he ordered the immediate dissolution of the unit created by the Biden administration with the purpose of investigating and prosecuting the criminal use of digital assets; and
- declared that the DoJ “is not a digital asset regulator” and that, therefore, exchanges, mixing services and “offline” wallets would no longer have to be prosecuted for “the acts of their end users or for involuntary violations of regulations.”
This memorandum is welcomed with understandable enthusiasm by the sector, which immediately trusts in the possibility of a withdrawal of charges against Samourai developers. However, nothing happens. The memorandum, in fact, says nothing and indeed expressly excludes §1960, which deals with unlicensed money transmission activity and which is at the center of cases like Samourai Wallet.
A month later comes the plot twist, but it is not directly connected to the memorandum. It emerges that the New York prosecutor representing the prosecution in the Samourai Wallet case, aware of these interpretative uncertainties, had asked for a preliminary opinion from FinCEN on the Samourai Wallet case and had been told that, being a non-custodial wallet, the license was not necessary. The discovery is quite important also because it collapses, at least on the substantial4 level, the framework of the accusation and reinforces the idea that similar proceedings often have primarily a political purpose: well before the persecution of money laundering phenomena, the objective of governments is more often to drain liquidity from instruments that allow individuals to escape, through privacy, the logic of the traditional financial system.
Rodriguez and Hill’s defense has filed a motion to dismiss in the Samourai Wallet case, on the assumption that the requirement of “custody and control” of money is missing, while the prosecution has already argued stating that, in its opinion, the Bank Secrecy Act does not require custody or control of funds. Net of the possibility of appeal, it is clear that if the Judge were to accept the prosecution’s thesis, a very dangerous precedent would be created both for open source software developers and more generally for the entire Bitcoin ecosystem in the United States. In particular, the government seems to argue that to have a “money transmitter,” it is sufficient to accept to transmit funds on behalf of the public, regardless of whether you have control over the funds, citing quite embarrassing examples like the USB cable that transmits data without controlling them or the pan that transmits heat without controlling it. But if “transmit” were really meant as simply “facilitate in some way” the transfer of value, then anyone who contributed, even indirectly, to allowing a transaction could be considered a money transmitter, including the manufacturer of a signing device and even a miner or a mining pool, since these add transactions to Bitcoin’s timechain. All these actors could be asked to implement an identity verification system (KYC – Know Your Customer) for each transaction with obviously unsustainable effects.
On June 6, 2025, several cryptocurrency advocacy organizations, including Coin Center and the DeFi Education Fund, filed amicus briefs in support of the motion to dismiss, arguing that the DOJ’s theory could criminalize the development of open-source software and privacy tools. The hearing to discuss the motion to dismiss is scheduled for July 22, 2025. The outcome of this case could have significant implications for open-source software developers and the entire cryptocurrency ecosystem in the United States.
But this affair is also intertwined with the fate of an industry bill: the Genius Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act), focused on the regulation of payment stablecoins, i.e., digital tokens pegged to the dollar and intended to be used as a means of payment or settlement. Approved (for now) by the (only) Senate in June 2025, the GENIUS Act does not explicitly mention non-custodial wallets. However, the definition of “digital asset service provider” in the bill text expressly excludes: “[…] distributed ledger protocol; developing, operating, or engaging in the business of developing distributed ledger protocols or self-custodial software interfaces; an immutable and self-custodial software interface; developing, operating, or engaging in the business of validating transactions or operating a distributed ledger; or participating in a liquidity pool or other similar mechanism for the provisioning of liquidity for peer-to-peer transactions.” This exclusion allows arguing in favor of excluding non-custodial wallets (and their developers) from the obligations provided by anti-money laundering (AML) and Bank Secrecy Act (BSA) regulations in the United States. With the further consequence that those who develop or manage non-custodial wallets would not fall among the subjects regulated as digital asset service providers and, by extension, would not be subject to the BSA nor to AML/CFT obligations (such as KYC, SAR filing, recordkeeping).
Obviously this does not mean that non-custodial wallets are “beyond any control,” because there could be indirect obligations (e.g., for exchanges that interact with non-custodial wallets) and in case of illicit use (e.g., to facilitate crimes), authorities could still investigate developers or providers, even if not AML subjects in a technical sense, but the argument is important and, above all, touches on perhaps the most deserving topic of attention for Bitcoin, because this is where the most important game is played for the future of non-custodial wallets, the Lightning Network protocol and, more generally, open source and, therefore, a large part of financial freedom in the digital age.
In this tense scenario full of ambiguities, WoS’s decision to re-enter the American market as a non-custodial wallet reveals itself, therefore, not only as a technical and market choice of undoubted interest, especially considering the characteristics of rare ease of use of the service, but also as a real opportunity to try to preside over and defend a space – as a tool that puts individual freedom at the center – in the face of the acknowledgment that the custodial model is now irremediably attracted into the network of AML/CFT regulations.
Not only that. Even wanting to set aside the ideological aspect for a moment, it is important to highlight that if compliance is already a challenge in on-chain transactions, the development of layer 2 solutions, such as Lightning Network, presents new complexities and inevitable future tensions with regulators. The golden rule placed to safeguard AML/CFT is, in fact, the Travel Rule, that is, that rule introduced for the first time in 2019, which requires VASPs (understood as digital asset service providers) that imposes that certain information travels with transactions between financial institutions. On LN transactions occur off-chain and are often structured to maximize privacy and efficiency, using multi-hop payments with onion routing5, where transactions pass through multiple intermediate nodes, making it difficult to determine the true origin and destination. Unlike on-chain transactions that are recorded on a public ledger, layer 2 transactions are ephemeral and are settled on-chain only periodically, making transaction tracking more complex. Not only that. Many Lightning transactions occur peer-to-peer without the intervention of an exchange or a custodian, which involves the lack of intermediaries that would traditionally ensure compliance with the Travel Rule.
Governments and regulators have long been wondering how to apply AML/CFT regulations to level 2 solutions, without having reached a solution to date. Using custody as a criterion for distributing the application of stricter rules would be the best way to sensibly mediate between government control and the libertarian option exercised through self-custody. In this perspective, the return to the United States in non-custodial mode appears not only as the only path still open in the medium term, but also a form of civil resistance, necessary to defend the idea – as simple as it is radical – that laws, to be observed, should first of all be just. And if it is true that the battle for financial privacy is fought on multiple fronts – regulatory, judicial, technological – then every node in the network, every developer, every non-custodial wallet that continues to exist is a declaration of principle. Because freedom also lives in the details: like the possibility of custody of one’s own bitcoin without necessarily asking permission.
- The arrest of Keonne Rodriguez and William Lonergan Hill follows an investigation by the U.S. Department of Justice (DoJ), which led to charges against them for allegedly helping to move $100 million in laundered funds and facilitating illegal transactions exceeding $2 billion.
Samourai is a mobile Bitcoin wallet known for its strong focus on transaction privacy. Specifically, the Samourai team developed a “mixing” service called Whirlpool, which was used by tens of thousands of Bitcoin to mix funds before sending transactions, enhancing “forward privacy” by obscuring the link between the input (original transaction) and the output (transaction to the recipient).
In the days following the arrests, the FBI issued a public notice urging U.S. citizens not to use services that are not authorized to operate as a Money Transmitter (or Money Services Business). This position openly contradicted the agency’s own 2019 guidance, which stated that a service delivering, communicating, or providing access to a network used by a licensed Money Transmitter is not itself considered a money transmitter. ↩︎ - FinCEN is a U.S. government agency responsible for preventing and combating financial crimes, such as money laundering, terrorist financing, and other abuses of the financial system. FinCEN collects and analyzes financial data from banks, businesses, and institutions to identify suspicious activity, and is primarily responsible for enforcing the Bank Secrecy Act (BSA), one of the cornerstone laws of anti-money laundering regulation in the United States.
FinCEN is particularly active in regulating digital assets. It has clarified, for example, that entities facilitating value transfers between parties — such as exchanges or, in some cases, wallets — may be classified as “money transmitters” and therefore subject to registration and AML/KYC obligations.
In the Samourai Wallet case, FinCEN was consulted to determine whether a non-custodial wallet would require a license. This underscores the agency’s direct influence over the regulatory landscape surrounding the Bitcoin ecosystem. ↩︎ - U.S. regulations specifically define the term money transmitter as “any person… engaged in the business of accepting currency, or funds denominated in currency, and transmitting currency or funds, or the value of currency or funds, by any means through a financial agency or institution… or… any other person engaged as a business in the transfer of funds.”
FinCEN issued this guidance to clarify whether a broker or dealer in currency or other commodities (such as precious metals) might be considered a money transmitter under anti-money laundering (Bank Secrecy Act) regulations. It states that if the acceptance and transmission of funds is an integral and necessary part of executing a transaction (such as the actual purchase or sale of a currency or commodity), then the broker/dealer is not considered a money transmitter.
However, if the broker transfers funds between the customer and a third party not directly involved in the transaction, it could be classified as a money transmitter. This would apply, for example, to funds deposited by a third party into a customer’s account, transfers of customer positions to third parties, or payments to third parties from the proceeds of currency or commodity sales.
See www.fincen.gov. ↩︎ - Substantive rather than formal, since — as far as is known — the system does not assign decisive interpretative authority to the opinions provided by FinCEN in specific cases. ↩︎
- Onion routing is a privacy system that protects users’ identities when sending bitcoin through the Lightning Network. Imagine you want to send a message (or a transaction) through three people: Alice → Bob → Carol → Dave. You are Alice and want to send bitcoin to Dave, but you don’t want Bob or Carol to know who you are or whom you’re sending to.
Here’s what happens: just like an onion has multiple layers, the message is encrypted in layers. Each “node” (e.g., Bob, Carol) can only decrypt its own layer and has no knowledge of what came before or after. Bob receives the message and only sees that it needs to be forwarded to Carol. Carol does the same with Dave. No one along the path knows the full route. Only Dave knows he’s the final recipient, and no one else on the path knows the identity of the original sender.
Lightning was designed for fast, low-cost transactions, mimicking the experience of physical cash — and, with it, bearer money that protects the identity of its users. ↩︎
