Senator Warren releases a new crypto bill alongside Roger Marshall to combat crypto crime. However, the new regulations are more against crypto progress. What next?
On December 14, Senator Warren proposed a new bill to combat money laundering acts, funding terrorists, and transactions from banned sanctions. The bipartisan legislation dubbed ‘Digital Assets Anti-money Laundering Act of 2022’ hopes to curb risks illicit crypto asset transactions pose to the US national security.
Senator Warren conjoined her efforts with Senator Roger Marshall to create a more regulated framework for digital assets. This move comes a month after President Joe Biden and other G20 leaders saw it fit for crypto assets to face more regulations after FTX’s collapse. As such, the G20 meeting held by Indonesia’s presidency decided on more stringent crypto regulations.
As per Senator Warren’s statement, banned sanctions like North Korea, Iran, and Russia leverage crypto assets for money laundering and terrorist acts. Furthermore, other illegal activities, including but not limited to drug and human trafficking, fraud, and theft, often go unsolved due to crypto’s private and decentralized nature.
True to her claims, the blockchain security firm Chainalysis released a report on January 6, 2022, listing the funds linked to illicit activity. Over $14 billion worth of crypto transactions had ties to illegal funding activities in 2021. The firm attributes the new highs to crypto adoption that cybercriminals leverage to progress their activities.
What the bill aims to achieve
The bill will stretch the BSA (Bank Secrecy Act) to digital wallets and other digital asset service providers, including miners and validators. As such, these services need to evaluate their customers such as through KYC procedures.
This step will mandate FinCEN to rank crypto service providers as MSBs. Furthermore, the financial watchdog will be able to demand all records and reports concerning customers. Also, this mandate extends to unhosted wallets. FinCEN will also require crypto ATM service providers to submit reports on the ATMs’ locations, and customers served.
The SEC, CFTC, and US Treasury Department will establish counter-terrorism funding and anti-money laundering regulations for all services they regulate. The regulators will use the guidelines to examine and review the entities’ compliance with the rules.
For more clarity, service providers cannot use crypto mixers and any other technology that enhances anonymity in crypto transactions. This specific regulation will affect digital assets like Monero with complete user privacy. Furthermore, any transaction services within the US that encourage anonymity will face bans.
Lastly, any crypto user transacting more than $10 000 using offshore accounts should report to the FBAR and IRS.
Is Senator Warren stifling crypto’s progress?
While understanding the much-needed regulations in the crypto industry, the new bill seems to stifle crypto’s progress. The crypto industry strives to drive anonymity, security, and decentralization. However, this bill seems to destroy these core values by mandating customer info breaches to combat illegal activities.
This point raises a crucial question of whether regulations are for or against crypto. Meanwhile, it is also right to consider other methods to limit illegal activity while encouraging the rise of the crypto and blockchain industries. Also, it is agreeable that using traditional banking regulations for crypto is not right.
Concerning the recent FTX scandal, the bill has no way of fighting a replay of such occurrences. Therefore, it is only right that the regulatory bodies in the crypto industry find new regulations that protect investors and other crypto users.
