Massachusetts Senator Elizabeth Warren is once again smearing the cryptocurrency industry and attempting to make Americans more dependent on big banks.
Warren vowed in February to reintroduce the Digital Assets Anti-Money Laundering Act, a proposal that went nowhere when she first introduced it with Kansas Senator Roger Marshall in December 2022. While the proposal’s stated purpose is to protect Americans from scams, it is more likely to drive cryptocurrency businesses overseas and weaken consumer choice. It prohibits the use of digital asset mixers and requires self-hosted wallets — like the kind you keep on your cell phone — along with miners and validators to have Anti-Money Laundering (AML) policies. Many of those entities may not even be able to impose such requirements, meaning they would simply need to shut down or stop servicing American users.
The proposal is the wrong one — at an opportune time. While recent high-profile frauds and thefts demonstrate the need for some crypto regulations and enforcement, the bill amounts to a smear campaign against the industry that would make Americans more dependent on traditional banks. But she is simply wrong when she says that cryptocurrency is “the method of choice for international drug traffickers” and terrorists. In fact, only about $10 billion or less in cryptocurrency is involved with money laundering each year, compared with between $800 billion and $2 trillion laundered in conventional currencies.
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The bill is particularly harsh on decentralized finance (DeFi), including noncustodial ones, requiring platforms to record the personal information of users and submit it to the government without a warrant or probable cause. It’s a bit like blaming the city because you were mugged on the sidewalk. The bill also lumps together all miners, including those mining for themselves as opposed to processing transactions for others, as money service businesses. It also ignores the fact that miners can provide other services unrelated to transactions.
Most absurdly, companies that develop the software would be required to register as money service providers, adopt Anti-Money Laundering policies and report customers to the Financial Crimes Enforcement Network. By this logic, electronics stores like Best Buy and Micro Center should register as money service providers because the cell phones they sell could be used to commit…
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