US Banking Advocacy Group Backs Sen. Warren’s Reintroduced Crypto Regulation Proposal

The Bank Policy Institute (BPI), a prominent banking advocacy group in the United States, has expressed its endorsement of Senator Elizabeth Warren’s proposed legislation on digital assets. Senator Warren, a well-known critic of cryptocurrencies, reintroduced the Digital Asset Anti-Money Laundering Act, co-sponsored by Senators Joe Manchin, Roger Marshall, and Lindsey Graham.

The bill aims to subject digital assets to a dedicated set of Anti-Money Laundering (AML) laws to enhance transparency in crypto transactions and combat money laundering and terrorism financing. As it stands, the current AML framework in the US does not adequately address digital assets, according to the BPI’s statement.

In their support of the bill, the BPI emphasized the importance of adapting the existing AML and Bank Secrecy Act framework to encompass digital assets fully. They believe that safeguarding the nation’s financial system against illicit finance requires comprehensive regulation that includes the crypto industry.

The proposed legislation, outlined in a seven-page bill, calls for digital asset wallet providers, miners, and other participants validating and securing blockchain transactions to maintain detailed records of their customers’ identities. Additionally, it seeks to prohibit financial institutions from using digital asset mixers, such as Tornado Cash, which are designed to obscure blockchain data and transaction trails.

Senator Warren’s bill has garnered support from various other organizations, including the Massachusetts Bankers Association, the National Consumer Law Center, and the National Consumers League.

However, not everyone in the crypto community shares the same sentiment. Tyler Winklevoss, co-founder of the Gemini cryptocurrency exchange, publicly criticized the bill, suggesting that those opposing Warren’s proposed regulation are on the right path.

Senator Warren had initially introduced this bill to the US Senate in December 2022, highlighting the inadequacy of current AML laws in covering the rapidly evolving crypto industry.

During a Senate Banking Committee hearing titled “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers” on February 14, Senator Warren further stressed her stance on regulating cryptocurrencies. She argued that the crypto industry should be subjected to the same money-laundering rules as traditional banks, brokers, and money transfer services like Western Union.

Senator Warren pointed out that some in the crypto community seek exemptions from AML requirements, particularly for decentralized entities operating on code, such as those found in decentralized finance (DeFi). She raised concerns that such exemptions could create loopholes for money laundering activities facilitated by crypto platforms.

As the debate around crypto regulation continues, the fate of Senator Warren’s bill and its potential impact on the crypto industry remain subjects of intense discussion and speculation.

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