On Wednesday, U.S. Senators Elizabeth Warren and Roger Marshall proposed a bill to bring crypto under the same rules as banks, brokers and traditional money service businesses.
The Digital Asset Anti-Money Laundering Act aims to curtail money laundering within the crypto industry.
The bill calls for Know-Your-Customer (KYC) rules to be placed on blockchain infrastructure providers, regardless of whether they are miners, validators or digital wallet providers. These network participants would be classified as “money service businesses” and fall under the purview of the Treasury Department’s Financial Crimes Enforcement Network or “FinCEN.”
Under the proposed legislation, FinCEN would hold institutions accountable for disclosing transactions involving self-custody wallets. The bill also bans institutions from interacting with privacy-enhancing digital asset mixers like Tornado Cash.
Warren described the bill as one that “puts common-sense rules in place” and closes existing loopholes within the realm of crypto money laundering. In a statement to CNN, she alluded to the FTX bankruptcy as the reason why digital assets are receiving an added layer of scrutiny.
“Nothing about the bill would prevent the next FTX. In fact, it puts users at more risk,” tweeted Neeraj K. Agrawal, director of communications at crypto think-tank Coin Center. According to him, the proposed bill is an unconstitutional assault on self-custody, developers and node operators within the industry.
“Elizabeth Warren is so uneducated on the subject that she doesn’t realize the FTX blowup was the same as fractional reserve bank blowups that have been taking place for centuries. The FTX blowup is a prime example of the reason WHY Bitcoin was created; to eliminate trust,” tweeted on-chain analyst Will Clemente.