The crypto industry promises an improvement in the financial industry, but it, too, has been used for illegal activities for years now. From its use on the Dark Web in the early days to modern-day money laundering, sanction evasion, and other criminal activities, cryptocurrencies are being misused, primarily due to the lack of regulations.
This is why US Senator Elizabeth Warren is teaming up with Senator Roger Marshall of Kansas to push the new legislation — a bipartisan crackdown on criminal activities, primarily on money laundering.
Rogue nations, oligarchs and drug lords are using crypto to launder billions, evade sanctions and finance terrorism. My bipartisan bill puts common-sense rules in place to help close crypto money laundering loopholes and protect our national security.https://t.co/n69LZfX8zX
— Elizabeth Warren (@SenWarren) December 14, 2022
New bipartisan crypto legislation emerged this Wednesday
The Massachusetts Democrat and the Kansas Republican introduced the legislation this Wednesday, stating that its purpose is to close certain loopholes in the current financial system. These loopholes, according to the senators, pose national security risks, as they allow the use of digital assets for money laundering.
The new legislation, known as the Warren-Marshall crypto legislation, is unlikely to go through Congress this time around, mostly because of time constraints. As such, it will likely have to be reintroduced during the next Congress session. When and if it passes, it will force cryptocurrency companies to follow the same rules as traditional companies and banks.
Sen. Warren stated to the press that she has been pointing out the dangers involving crypto loopholes for a long time without much success. As a result, she is working in a bipartisan manner in order to pass crypto legislation that will safeguard the national security of the entire country.
FTX is an example of what happens with no rules in place
Warren also pointed out the damage that crypto firms can do if they are not obligated to bend to the rules of traditional firms by referring to the FTX collapse and the impact that it had on the broader crypto industry. The exchange’s former CEO, Sam Bankman-Fried, is now even facing criminal prosecution. All of this means that digital assets are under scrutiny across the entire political spectrum.
Speaking of Sam Bankman-Fried, he was indicted for money laundering and a number of other federal offenses only a day before the Warren-Marshall legislation was introduced. The prosecution claims that the former CEO of FTX engaged in a worldwide scheme to defraud and deceive everyone, from his own customers to lenders, investors, and the entire campaign finance system.
This is why the new legislation, called the Digital Asset Anti-Money Laundering Act, is necessary, as it would force the digital asset ecosystem into compliance with the system of AML procedures that are already there, applied to traditional assets. If passed, the legislation would direct the FinCEN within the Treasury to come up with designated wallet providers, validators, miners, and other entities in the industry.
The illegal use of crypto and the proposed requirements
The US Treasury already issued warnings against criminal activity in crypto this year, pointing out hacking attacks, fraud, drug trafficking, and others who were relying on the pseudonymity of the crypto industry to conduct illegal operations. Meanwhile, nations such as Russia, Iran, North Korea, Venezuela, and others have used digital assets to bypass sanctions.
Marshall commented on the matter as well, noting that the US government enacted meaningful reforms that helped with eliminating bad actors from the financial system once before, after September 11th, 2001. Now, according to him, it is time to apply these same policies to crypto exchanges.
The bill will also push lawmakers to come up with new restrictions for digital wallets that allow people to bypass AML and sanctions checks. As for other requirements of the legislation, these include banning financial institutions from using or transacting with anonymity-enhancing technologies; extending Bank Secrecy rules to include cryptocurrencies; leading regulators to increase enforcement of the Bank Secrecy Act; cracking down on crypto ATMs, and more.
Related
- Crypto Criminals: Mixer Volumes Reach All-Time High in 2022
- Interpol Launches Global Police Metaverse To Fight Crypto Crime
- ‘Doctor Bitcoin’ Mark Hopkins Goes to Prison, Warns on Danger of OTC Trading
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This article was written for Business 2 Community by Ali Raza.
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