DOJ Clarifies Open Source Smart Contract Developer Liability in New Guidance

The United States Department of Justice (DOJ) has issued its most definitive guidance to date on the criminal liability of cryptocurrency developers, offering significant clarity for those building smart contracts and contributing to open-source projects. Speaking at the American Innovation Project Summit on August 21, 2025, Matthew Galeotti, head of the DOJ’s Criminal Division, emphasized that writing code without criminal intent does not constitute a crime. This statement addresses long-standing concerns within the crypto industry about the potential for developers to face prosecution for the misuse of their tools by third parties. The guidance sets a high bar for criminal liability, requiring specific intent, and aims to protect innovation while targeting actual criminal conduct.

Galeotti’s remarks provide a clear framework for developers operating in the digital asset ecosystem. He explicitly stated that merely contributing code to open-source projects does not expose developers to liability for aiding and abetting criminal activities unless there is evidence of specific intent to facilitate a crime. This approach responds to concerns raised by defense counsel about the risks faced by smart contract developers and code publishers who are not directly involved in peer-to-peer transactions. By establishing that prosecutors must prove intent, the DOJ seeks to ensure that lawful innovation is not stifled by overly broad interpretations of criminal law.

Decentralized Software and Regulatory Protections

A key aspect of the DOJ’s guidance focuses on decentralized software, particularly software that automates peer-to-peer transactions without third-party custody or control over user assets. Galeotti clarified that developers of such software will not face charges under 18 USC 1960 for unlicensed money transmission unless there is evidence of willful violation of specific legal requirements. This protection aligns with regulatory guidance suggesting that non-custodial crypto software does not fall under the definition of money transmission. The DOJ’s stance offers reassurance to developers working on DeFi platforms, where automation and user autonomy are central to the technology’s design.

The guidance also addresses broader industry concerns about the misuse of neutral tools. Galeotti emphasized that developers should not be held accountable for third-party actions that violate criminal law, provided they lack criminal intent. Instead, prosecutors will focus on those who actively misuse these tools, ensuring that enforcement targets actual wrongdoers rather than creators. This principle reflects the DOJ’s technology-neutral approach, which treats digital asset crimes similarly to traditional financial violations while safeguarding legitimate innovation from regulatory overreach.

The DOJ’s position acknowledges the complexity of applying existing laws to emerging technologies. Galeotti described these issues as requiring careful, case-by-case evaluation, recognizing that legal and factual nuances must guide prosecutorial decisions. By setting a higher evidentiary standard for developer liability, the DOJ aims to balance the need to combat financial crimes with the importance of fostering technological advancement. This guidance is likely to be welcomed by the crypto community, which has long sought clarity on the legal risks associated with developing blockchain-based tools.

For developers, this announcement provides a clearer path forward, particularly for those working on open-source or decentralized projects. The DOJ’s commitment to distinguishing between lawful innovation and criminal conduct signals a pragmatic approach to regulating the rapidly evolving crypto landscape. As the industry continues to grow, this guidance could serve as a foundation for future policy, ensuring that developers can innovate without fear of undue prosecution. The DOJ’s focus on intent and misuse offers a balanced framework that supports both law enforcement objectives and the advancement of digital asset technologies.