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Home»News»Senator Warren Introduces a New Cryptocurrency Bill Aimed At Self-Custody Wallets
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Senator Warren Introduces a New Cryptocurrency Bill Aimed At Self-Custody Wallets

Saheel KhirodkarBy Saheel KhirodkarDecember 16, 2022Updated:December 16, 2022No Comments4 Mins Read
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Elizabeth Warren's next chapter - POLITICO
The bill, which would expand KYC requirements for crypto network participants, has been criticised as “opportunistic” and “unconstitutional.”
  • Senators Warren and Marshall introduced the Digital Asset Anti-Money Laundering Act today, aimed at the cryptocurrency industry.
  • The bill, which would impose new KYC requirements on crypto network participants, has been dubbed “opportunistic” and “unconstitutional” by the advocacy organization Coin Center.

Senators Elizabeth Warren and Roger Marshall today introduced the Digital Asset Anti-Money Laundering Act, which targets the cryptocurrency industry with a number of proposed regulations that critics call authoritarian and unconstitutional, during this week’s United States Senate hearings on FTX’s demise.

The proposed legislation would impose know-your-customer (KYC) requirements on blockchain infrastructure providers and participants operating in the United States, including developers who create software for decentralized networks and the miners and validators who support such networks.

According to Warren’s statement, the bill would direct the Financial Crimes Enforcement Network (FinCEN) to treat crypto wallet service providers, miners, validators, and other network users as “money service businesses,” requiring KYC for participants as well as anti-money laundering (AML) programs.

The bill would also apply to unhosted, or self-custody, crypto wallets, requiring platforms and networks to identify and track such customers’ transactions. FinCEN proposed such a rule in December 2020, which many crypto companies and advocates opposed, but it has yet to be implemented. The bill aims to complete that process.

Furthermore, any financial institution is prohibited from using a digital asset mixer service or other privacy-enhancing technologies. Mixers are commonly used to conceal cryptocurrency transactions between wallets. Tornado Cash, the most well-known Ethereum mixer service, was sanctioned by the US Treasury in August.

“The crypto industry, like banks, brokers, and Western Union, should follow common-sense rules, and this legislation would ensure the same standards apply across similar financial transactions,” Warren said in a statement. “The bipartisan bill will assist in closing crypto money laundering loopholes and strengthening enforcement to better protect US national security.”

Already, the proposed bill has sparked intense debate in the cryptocurrency industry. The crypto advocacy group Coin Center called the bill “an opportunistic, unconstitutional assault on cryptocurrency self-custody, developers, and node operators” in a post this morning.

Senators Warren and Marshall's proposed bill subjecting software devs & nodes to AML is "a repudiation of liberal values and a move towards the types of surveillance and control prized by authoritarians like Vladimir Putin, Xi Jinping, and Kim Jong-un"https://t.co/s7pRKsWV2W

— Peter Van Valkenburgh 🫑🦬🚲🌐πŸ₯ | πŸš«πŸ’³πŸ•΅οΈπŸŒ½πŸ›’οΈπŸš— (@valkenburgh) December 14, 2022

“The Digital Asset Anti-Money Laundering Act is a direct attack on technological progress as well as our personal privacy and autonomy,” Coin Center Director of Research Peter Van Valkenburgh wrote.

“Make no mistake: while ostensibly intended to address potential money laundering and terrorist financing, the bill is, in fact, a rejection of liberal values and a shift toward the types of surveillance and control prized by authoritarians like Vladimir Putin, Xi Jinping, and Kim Jong-un,” he added.

The bill was introduced in the aftermath of the November collapse of cryptocurrency exchange FTX, whose founder and former CEO Sam Bankman-Fried was arrested this week by Bahamian police on multiple criminal charges brought by US authorities.

Bankman-Fried faces charges from the U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), as well as the Complex Frauds and Cybercrime Unit at the Southern District of New York U.S. Attorney’s Office. According to Coin Center, the bill will not prevent another FTX-style collapse in the future.

“This bill is solely concerned with financial surveillance and does not address any of the issues of corporate control that led to FTX’s demise,” Van Valkenburgh wrote.

The proposed bill has received the same level of scrutiny as last year’s infrastructure bill, which expanded the Internal Revenue Service’s definition of a “broker” to include companies that trade crypto assets, requiring exchanges to report transactions to the government. It was feared that the bill would affect network participants such as validators and miners, as well as crypto wallet providers and others.

Unhosted wallet regulation has also gained traction in Europe this year, with the European Union voting in March to impose KYC on such wallets and the United Kingdom considering similar legislation this summer before abandoning its plans.

crypto wallets cryptocurrency cryptocurrency exchange KYC senator warren
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Saheel Khirodkar
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Saheel works as a content writer for Bitnewstoday. He has always been interested in journalism and enjoys writing. Furthermore, His interest lies in cryptocurrency, and is continuously seeking for new techniques to invest. In his free time, he enjoys staying up to date on the latest industry news and spending time with his family.

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