Senator Elizabeth Warren has introduced a bill that would impose heavy regulations on the crypto industry. Although the bill aims to combat money laundering, it raises concerns about its potential impact on innovation and privacy.
Key provisions of the anti-money laundering bill
Introduced in July 2023, Ms. Warren’s bill is still at a preliminary stage. It must in fact go through a vote in the Senate and then transmitted to the House before any final adoption. However, if it were to be enacted, this text would greatly impact the crypto industry, extending regulatory oversight to various service providers.
Senator Elizabeth Warren, known for her critical positions towards cryptos, propose to subject crypto providers to the same compliance obligations as traditional banks.
More specifically, his bill would treat a wide range of actors (unhosted wallet providers, miners, validators, etc.) as regulated financial institutions. They should therefore comply with anti-money laundering procedures, keep detailed records of transactions and carry out systematic identification of customers.
Warren justifies the legislation by arguing the need to combat the illicit use of crypto for criminal purposes, citing evidence that countries like North Korea are using these assets to fund weapons programs and evade international sanctions. .
However, some specialists fear the excessive impact of this regulatory tightening, likely to hamper DeFi innovation. Grant Fondo, co-chair of Goodwin’s digital currency and blockchain department, said the law “twould decentralized finance be implemented in the United States“. Imposing banking requirements on decentralized protocols would, according to him, be unrealistic.
Despite these caveats, the bill enjoys support within both major American parties. Alongside Ms. Warren, several renowned senators like Joe Manchin are pleading to regulate this digital Wild West.
Mixed reactions from the crypto industry
However, the proposed law is already raising controversies. Lawyer John Deaton accused thus Senator Warren violated her oath as a member of the Senate Banking Committee, by coordinating her actions with SEC Chairman Gary Gensler against the crypto industry. This supposed alliance adds to the complexity of the case.
Furthermore, despite some bipartisan support, final adoption of the text is not certain. With a deeply divided Congress and crucial midterm elections, regulation perceived as hostile to cryptocurrencies could face blockages.
The American crypto sector, already hit by recurring offensives from the SEC, would see this law as a new blow that risks curbing innovation. The most innovative companies in decentralized financial tech could try to leave the United States for more lenient regulatory climes, such as Hong Kong.
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