Sen Warren Bill on Crypto Regulation in the US spark reactions

The cryptocurrency industry has been facing increasing regulatory scrutiny in the United States over the past year. From tax reporting to anti-money laundering, lawmakers and regulators have been trying to impose stricter rules on crypto transactions and platforms. However, not all of them share the same vision or approach.

One of the most vocal critics of crypto is Senator Elizabeth Warren, who has repeatedly expressed her concerns about the risks and challenges that digital assets pose to consumers, investors, and national security. In December 2022, she introduced a bipartisan bill with Senator Roger Marshall that aims to crack down on cryptocurrency money laundering, financing of terrorists and rogue nations.

The bill, called the Digital Asset Anti-Money Laundering Act of 2022, would close loopholes in the existing anti-money laundering and countering of the financing of terrorism (AML/CFT) framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system. According to a press release from Warren’s office, the bill would:

Expand the definition of a money service business (MSB) to include any person that engages in digital asset transactions as a business or for profit.

Prohibit financial institutions from using technology that obscures or anonymizes digital asset transactions, such as mixers, tumblers, or decentralized exchanges.

Require MSBs to register with FinCEN and comply with AML/CFT requirements, such as customer identification, recordkeeping, reporting and monitoring.

Regulate digital asset ATMs and kiosks as MSBs and subject them to registration and compliance obligations.

Authorize FinCEN to issue civil penalties and injunctions against MSBs that violate AML/CFT rules.

Enhance information sharing and coordination among federal agencies and state regulators on digital asset enforcement actions.

Warren and Marshall argue that their bill would help prevent digital assets from being abused by criminals and sanctions evaders, while leveling the playing field between crypto and traditional finance. They cite reports from the Treasury Department, Department of Justice, and other national security and financial crime experts that warn about the growing use of digital assets for money laundering, theft and fraud schemes, terrorist financing, and other crimes.

However, not everyone agrees with their assessment or their proposed solution. Some crypto advocates and industry representatives have criticized the bill as being too broad, too vague, or too harsh. They claim that the bill would stifle innovation, infringe on privacy rights, create regulatory uncertainty, and drive crypto businesses out of the US.

For instance, Jerry Brito, the executive director of Coin Center, a non-profit research and advocacy group for crypto policy issues, tweeted that the bill would “ban privacy-preserving technologies” such as mixers and decentralized exchanges. He also pointed out that the bill would “create a new category of MSB” that would include anyone who transacts in crypto for profit, which could potentially cover miners, node operators, developers, or even casual users.

The bill has received mixed reactions from the cryptocurrency community and industry experts. Some have welcomed the bill as a positive step towards clarity and legitimacy for the sector, while others have criticized it as too restrictive and intrusive. Some have also questioned the feasibility and desirability of creating a Fedcoin, arguing that it would undermine the decentralization and innovation of cryptocurrencies.

The bill faces an uncertain future in Congress, as it would need to garner bipartisan support and overcome potential opposition from various stakeholders and interest groups. The bill also comes at a time when other countries are exploring their own approaches to regulating and adopting digital assets, such as China’s crackdown on crypto mining and trading, and El Salvador’s adoption of Bitcoin as legal tender.