Stopping the circulation of digital money Laundering of Funds
On February 14, Republican Rep. Roger Marshall and Democratic Sen. Elizabeth Warren, both noted for their scepticism of crypto assets (virtual currency), introduced the “Digital Asset Money Laundering Prevention Act.”
Cryptocurrencies are being used by autocratic regimes, billionaires, and drug lords to launder billions of dollars, circumvent sanctions, and finance terrorism. This bill is supported by both the Democratic and Republican parties, and it would enact commonsense regulations to prevent money laundering through cryptocurrencies.
Rogue nations, oligarchs and drug lords are using crypto to launder billions, evade sanctions and finance terrorism. My bipartisan bill puts common-sense rules in place to help close crypto money laundering loopholes and protect our national security.https://t.co/n69LZfX8zX
- Advertisement -— Elizabeth Warren (@SenWarren) December 14, 2022
The measure was announced at a Senate Banking Committee hearing on the FTX bankruptcy. There appeared to be an overwhelming number of people at the public hearing on the topic of “Crypto Collapse: Reasons for the FTX Bubble Burst and Damage to Consumers.”
In light of this rising interest, a bill was introduced to expand the scope of the Bank Secrecy Act’s know-your-customer (KYC) regulations beyond their original application to financial institutions. Developers of decentralised network software, miners and validators who aid the network, nodes who verify transactions, and wallet providers will all be subject to Know Your Customer regulations.
If passed, the measure would mandate that the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of the Treasury treat those network participants as “money services businesses,” allowing FinCEN to enforce Know Your Customer (KYC) and anti-money laundering (AML) rules. Even self-custody wallets have to comply with the banking industry’s record-keeping standards for cryptocurrency transactions. Cryptocurrency ATM owners must also comply with reporting requirements.
Also, the law would make it illegal for banks to use cryptocurrency mixers and technologies that protect privacy, like privacy coins.
rising number of dissenting opinions
The measure has been swiftly attacked by the sector due to its restrictive nature toward cryptocurrency freedom.
The following tweet was made by Coin Center’s Director of Communications, Neeraj Agrawal:
An opportunistic and unconstitutional assault on bitcoin self-custody, developers, and node operators. The next FTX cannot be stopped by this bill. Instead, it makes users more vulnerable to harm.
Peter Van Valkenburgh, who was in charge of research for the group, also had a lot of problems with the measure.
Senators Warren and Marshall's proposed bill subjecting software devs & nodes to AML is "a repudiation of liberal values and a move towards the types of surveillance and control prized by authoritarians like Vladimir Putin, Xi Jinping, and Kim Jong-un"https://t.co/s7pRKsWV2W
— Peter Van Valkenburgh 🫡🦬🚲🌐🥐 | 🚫💳🕵️🌽🛢️🚗 (@valkenburgh) December 14, 2022
Senators Warren and Marshall’s proposed rule would penalise AML software makers and hubs “as well as authoritarians like Vladimir Putin, Xi Jinping, and Kim Jong-un.”. It’s a step in the direction of omniscient monitoring and tight control, which we value.”
Valkenburgh stated on his blog that Warren’s proposal represented “a frontal assault on technological advancement and a direct assault on individual privacy and autonomy.”
Legislators that support crypto are no different. It’s an effort to halt the current trend of linking FTX’s demise to the regulation of cryptocurrencies.
The collapse of FTX is not an indictment of crypto. It’s an indictment of those who misused customer assets.
— Senator Pat Toomey (@SenToomey) December 14, 2022
As I’ve said for months, Congress needs to give regulatory clarity so business flows to prudent, sensible, well-regulated American crypto exchanges. pic.twitter.com/oXKZdawO0m
Although FTX may have failed, the demise of cryptocurrency is not to blame. Those who misappropriated consumer funds are being indicted.I’ve been saying for months that Congress needs to make rules clearer so that a smart, well-run cryptocurrency exchange in the United States can attract investors.
Pat Toomey, U.S. Senator
Rep. Cynthia Lumis, who offered a bipartisan proposal for cryptocurrency regulation, stated at the 14th hearing, “It’s not the cryptocurrency that’s on trial, it’s the fraud and its organisation.” In her criticism of the FTX demise hearing, she emphasised the need to keep cryptocurrency discussions distinct from those of the FTX organisation, which she called “old-fashioned fraud.”
