Fresh outrage erupts over Warren bill as 5 more senators sign on

Senator Elizabeth Warren (D-MA) announced an expanded coalition of Senate support this week for a bipartisan bill to mitigate illicit finance risks posed by cryptocurrencies.

Five additional senators have signed on as the bill’s cosponsors, including three members of the Senate Banking, Housing and Urban Affairs Committee — Senators Raphael Warnock (D-GA), Laphonza Butler (D-CA), and Chris Van Hollen of Maryland (D-MD). Senators John Hickenlooper (D-CO) and Ben Ray Luján (D-NM) also joined.

The Digital Asset Anti-Money Laundering Act seeks to bring the crypto ecosystem into greater compliance with anti-money laundering frameworks governing the traditional financial system.

According to the Treasury Department, digital assets have increasingly been used for money laundering, ransomware attacks, theft schemes, terrorist financing, and other criminal activity. A White House report last year found that in 2021, illicit crypto transactions reached $20 billion globally – an all-time high.

The bill

The bipartisan Digital Asset Anti-Money Laundering Act aims to regulate digital assets like cryptocurrencies to combat illicit finance risks. It would expand the definition of “financial institutions” overseen for anti-money laundering compliance to include cryptocurrency miners, hardware wallet providers, and independent blockchain validators that facilitate digital asset transactions.

Within 180 days, the Treasury Department must issue anti-money laundering regulations for these newly covered entities. The bill grants the Treasury the authority to require their registration with FinCEN. It also sets a one-year deadline for FinCEN to finalize pending regulations on transactions involving convertible virtual currencies.

Additionally, the legislation directs FinCEN to impose new reporting rules and transaction oversight measures related to digital currency mixers and anonymity-enhanced cryptocurrencies often used to obscure asset provenance. It tasks the Treasury with crafting regulations forcing financial institutions to establish risk controls surrounding interactions with anonymizing digital asset technologies.

The bill also outlines requirements for FinCEN, the Securities and Exchange Commission, and the Commodity Futures Trading Commission to develop specialized examination procedures assessing compliance with anti-money laundering rules among digital asset sector participants.

The problem

If passed as written, the Digital Asset Anti-Money Laundering Act could…