Elizabeth Warren, Roger Marshall bill to protect crypto users

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Elizabeth Warren, Roger Marshall bill to protect crypto users

Senators say the law must be passed to curb money laundering and criminal use of Cryptocurrencies.

It is the greatest legislative threat to crypto ever made by the government.

This is the conclusion drawn by Coin Center, the cryptocurrency industry think tank, after analyzing a bill introduced Wednesday by Sen. Elizabeth Warren and Sen. Roger Marshall.

In an effort to bring crypto into the regulatory regime governing TradFi, the bill would extend know-your-customer requirements to crypto wallet providers, miners, validators and other network participants that may act to validate, secure, or facilitate digital asset transactions. Would such ventures be designated as money service businesses?

The Digital Asset Anti-Money Laundering Act would also prohibit financial institutions from using a Tornado Cash-style mixer or other 'anonymity enhancing technologies' and from using crypto that had gone through such protocols. The bill will be enacted today to tighten up crypto money laundering loopholes and strengthen regulations to enhance security in the U.S. national security system.

In pursuing anonymity, the Senate senators are treading on one of the most cherished values in crypto - financial privacy. However, they argue the step is necessary to curb the criminal use of cryptocurrencies.

Warren and Marshall chose their moment well. A day after U.S. prosecutors charged Bankman with eight counts of fraud, conspiracy, and campaign finance violations in connection with his management of FTX, the two senators introduced the bill.

Bankman-Fried has been accused by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission of defrauding investors since 2019 by using customer assets to cover losses and margin calls at Alameda Research, the cryptocurrency hedge fund.

Bankman-Fried and crypto lobbyists stressed that such language would be amendmentable by the time the bill reaches a final draft. Odds of that bill's passage this year have evaporated, even after the collapse of FTX and scrutiny of everything related to Bankman-Fried, Fortune has reported, though the bill is expected to be reintroduced next year.

Crypto Center referred to the DCCPA in its takedown of the Warren-Marshall bill Wednesday.

We have been outspoken critics of legislation that unknowingly or unwittingly sweeps non-custodial infrastructure providers and software developers into the ambit of financial services surveillance and regulation, it said.

Warren, a former Harvard University professor in bankruptcy law, is a prominent critic of crypto among lawmakers and frequently emphasizes its use in fraud, cyber crime and sanctions evasion.

The same report notes that growth in crypto crime was outpaced last year by growth in crypto usage overall. 'illicit activity's share of cryptocurrency transaction volume has never been lower, accounting for less than a fifth of one percent of all transactions in 2021, according to Chainalysis.

Warren is the only senator with an ''F' rating from the Crypto Action Network, a nonprofit funded by Coinbase. Roger Marshall, among many lawmakers, did not receive a grade on cryptocurrency due to lack of action.

Marshall said in a prepared statement that ''American financial system'' is not a substitute for America's financial system.