Elizabeth Warren, Roger Marshall bill to curb money laundering, criminal use of cryptocurrencies

117
3
Elizabeth Warren, Roger Marshall bill to curb money laundering, criminal use of cryptocurrencies

Senators say laws are needed to curb money laundering and criminal use of cryptocurrencies.

It's the greatest legislative threat to Cryptocurrency that has ever been instituted.

That is the conclusions drawn by the 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 TradFi's regulatory regime, the bill would extend knowledge-your-customer requirements to crypto wallet providers, miners, validators, and other network participants that may act to validate, secure, or facilitate digital asset transactions. Money service businesses would be designated as such ventures.

The Digital Asset Anti-Money Laundering Act would also ban 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 would help close crypto money laundering loopholes and strengthen enforcement to enhance U.S. national security.

The senators are treading on one of the most cherished values in crypto - financial privacy. However, they argue that the move is necessary to curb criminal use of cryptocurrencies.

Warren and Marshall both picked their moment well. The two Senate Republicans introduced the bill a day after U.S. prosecutors charged Sam Bankman-Fried with eight counts of fraud, conspiracy, and violations of campaign finance laws in connection with his management of FTX.

Bankman-Fried has been charged with defrauding investors since 2019, by using customer assets to cover losses and margin calls with Alameda Research, the cryptocurrency hedge fund, the 30-year-old entrepreneur controlled.

Bankman-Fried and crypto lobbyists stress this was not the aim of the bill and added 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 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.

Coin Center's takedown of the Warren-Marshall bill Wednesday centered around the DCCPA.

We've 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 of bankruptcy law, is one of the most outspoken critics of crypto among lawmakers and frequently highlights 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. In addition, Chainalysis said that illegal activity's share of cryptocurrency transaction volume has never been lower, accounting for less than a fifth of one percent of all crypto transactions in 2021.

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

Marshall said America's financial system was not a'model' for the world's financial system.