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Senator Elizabeth Warren has put forward a bipartisan bill that aims to crack down on money laundering loopholes in the crypto industry.
According to a Wednesday report by CNN, Warren, a Massachusetts Democrat, is teaming up with Republican Senator Roger Marshall of Kansas to introduce the new legislation. In short, the bill aims to force crypto companies to abide by the same rules that banks and traditional financial institutions have to follow.
“Rogue nations, oligarchs and drug lords are using crypto to launder billions, evade sanctions and finance terrorism,” she said in a tweet. “My bipartisan bill puts common-sense rules in place to help close crypto money laundering loopholes and protect our national security.”
Called the Digital Asset Anti-Money Laundering Act, the new bill would seek to bring the crypto ecosystem into compliance with the existing system of anti-money laundering in the worldwide financial system, potentially closing loopholes.
The legislation would direct the Financial Crimes Enforcement Network (FinCEN) within the Treasury Department to designate digital asset wallet providers, miners, validators and others as money service businesses. That in turn would extend responsibilities in the Bank Secrecy Act to the crypto industry, including Know-Your-Customer (KYC) requirements, according to CNN.
The bill would also ban banks from transacting with anonymity-enhancing technologies such as digital asset mixers, require Americans who transfer over $10,000 to file a report with the Internal Revenue Service, and crack down on digital asset ATMs.
“Everyone on Capitol Hill can agree that Bankman-Fried is a crook,” Isaac Boltansky, director of policy research at BTIG, said, “but when we move from the high level to the ground level, it becomes clear that legislative hurdles and potholes remain.”
Reportedly, the Warren-Marshall bill does not have much chance of getting through this Congress due to time constraints. Therefore, the legislation might need to be reintroduced when the new Congress is seated.
The new crypto legislation comes after the unprecedented collapse of FTX, once the third-largest cryptocurrency exchange that failed in early November and delivered billions of dollars in losses to retail clients.
Sam Bankman-Fried, the disgraced founder of the exchange, was arrested by the government of The Bahamas on Monday after US prosecutors formally filed criminal charges against him.
Notably, the Southern District of New York has indicted SBF on eight criminal charges including wire fraud and conspiracy by misusing customer funds. Separately, the Securities and Exchange Commission charged SBF with “orchestrating a scheme to defraud equity investors in FTX.”
Meanwhile, the G20 countries also plan to create a policy consensus on cryptocurrencies in a bid to better regulate the asset class.
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