Tornado Cash Crackdown: Is the DOJ Killing Crypto Innovation – What’s Next for Ethereum?

With Kraken and Coinbase leading the way, a coalition of 34 cryptocurrency businesses is urging Congress to question the extensive reading of money transmitter legislation by the Department of Justice (DOJ). According to the organization, the attitude of the DOJ might stifle creativity among nearly all blockchain developers by making it criminal. Although the Financial Crimes Enforcement Network (FinCEN) made clear in 2019 that non-custodial developers aren’t money transmitters, the DOJ has been harsh and is prosecuting developers such as those of Tornado Cash. Will Congress act to safeguard American cryptocurrency innovation?

The DOJ’s Crypto Crackdown and Industry Backlash

The crypto business is warning over the Justice Department’s strict application of money transmitter rules, contending that it runs contrary to FinCEN advice. Software developers who lack control of customer funds are not seen by FinCEN as money transmitters, according to notes from 2019. Under money laundering laws, though, the DOJ has brought prosecutions against developers such as those behind Tornado Cash. This contradictory regulatory posture has created much confusion. The group of crypto companies cautions that without legal certainty. 

Blockchain developers could legally be charged merely for creating open-source code. The prospect of prosecution might drive away creativity and talent from the US, hence severely affecting the local crypto industry. Congress is being urged by industry leaders to intervene and create definitive standards differentiating custodial and non-custodial crypto services. The issue still is: will legislators act to protect blockchain development, or will the interpretation of the DOJ choke cryptocurrency innovation in the United States? Let’s have a look at the ETH price prediction to see how these developments impact the price of ETH.

ETH Price Prediction on March 27, 2025

Trading at $2,025, Ethereum (ETH) shows signals of consolidation following a significant fall from the $2,080 resistance level. Starting below important support around $2,040, the price dropped sharply to $1,980, where buyers started buying. Though resistance is still strong, a breakout from a descending channel drove ETH back toward $2,030. If ETH clears $2,040, it might make another push toward $2,080. Not having $2,000, however, could cause a more substantial correction toward the $1,980 support region. 

Chart 1: Analysed by vallijat007, published on TradingView, March 27, 2025

Particularly as legislators discuss modifications to money transmitter legislation that might affect DeFi and smart contract platforms, Ethereum’s price still reacts to regulatory developments. ETH’s next move will be critical given increasing institutional interest and the possibility of an Ethereum ETF approval. Traders are looking for a breakout or possible retest of lower levels before the next major move. Will it break above resistance and recover bullish momentum, or will regulatory uncertainty drive prices down?

The Future of Crypto Regulation and Blockchain Innovation

Blockchain technology development in the United States going forward could be influenced by the fight over money transmission regulations. If Congress fail to act, the DOJ’s forceful attitude could drive developers abroad and so restrict the part the United States plays in cryptocurrency innovation. But legislators settle the nature of custody. It could offer legal certainty sorely needed if combined with non-custodial offerings. Meanwhile, Ethereum’s value is linked to policy changes. Tornado Cash remains a key example of regulatory overreach, highlighting the risks developers face. The ongoing Tornado Cash case could set a precedent for future blockchain innovation.