Senator Warren’s Call to Action
In an audacious move just in time to resurrect legislative interest, Senator Elizabeth Warren has announced plans to reintroduce a bipartisan Anti-Money Laundering (AML) bill targeting decentralized entities such as DeFi protocols and DAOs. This comes after a Senate Banking Committee hearing dubbed “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets” where Warren didn’t mince her words. She criticized the crypto community’s desire to skirt AML regulations, asserting that it essentially grants a “giant loophole” for illicit activities.
The Bill’s Core Provisions
The anticipated Digital Asset Anti-Money Laundering Act of 2022 is a seven-page legislative document that seeks to tighten the screws on crypto operations. If it passes as initially proposed, it would prohibit financial institutions from utilizing digital asset mixers, which are notorious for concealing blockchain transaction details. A notable example of such mixers is Tornado Cash, often regarded as a go-to for money laundering.
The Ripple Effect on Crypto Participants
The newcomer’s impact wouldn’t just be limited to mixers; unhosted wallets, miners, and validators will also be subject to AML policy requirements. As Warren noted, existing AML laws miss crucial segments of the cryptocurrency universe, creating fertile ground for malfeasance. For instance, the crypto exchange ShapeShift reportedly pivoted towards a DeFi model in July 2021 to evade regulatory scrutiny. Coincidentally, their slogan could’ve read: “Come launder your money here, no questions asked!”
Cryptocurrency: The New Favorite for Financial Foes?
Warren has been clear about her stance that cryptocurrency serves as the “preferred method” for a plethora of international criminals, including drug traffickers and hackers. The Senator asserted that the crypto market processed a staggering $20 billion in illicit transactions last year, purely by dubious dealings already known to regulators. The figures come straight from Chainalysis, a blockchain analytics firm, making the claims hard to dismiss.
Global Perspectives on Crime and Crypto
Interestingly, a United Nations representative pointed out at a committee meeting that while cash remains the gold standard for terrorist financing, there’s a noticeable uptick in reliance on cryptocurrency for such activities. Even North Korean hackers have encountered roadblocks at exchanges like Binance and Huobi, with these platforms refusing to facilitate funds linked to their nefarious schemes. Talk about a bad day in crypto!
