Big banks’ participation in drafting digital asset anti-money laundering law raises concerns
A video was recently released showing the involvement of big banks in drafting the Digital Asset Anti-Money Laundering Act proposed by Senators Roger Marshall and Elizabeth Warren. First introduced in December 2022, the bill has received significant attention due to its potential impact on the cryptocurrency sector.
In a revealing video, Senator Roger Marshall said he and Senator Elizabeth Warren approached the American Bankers Association (ABA) for help in enacting digital asset anti-money laundering legislation. This intervention by big banks has raised eyebrows in the cryptocurrency community, with Coinbase CEO Brian Armstrong expressing disappointment at the senators’ apparent alignment with banking interests.
The bill aims to integrate cryptocurrency technology, including non-custodial wallets, validators and mining pools, into America’s strict banking regulations. The intention is to expand existing financial regulations to digital assets to address loopholes in anti-money laundering (AML) and terrorist financing. This includes extending Bank Secrecy Act liability to a wider range of actors in the digital asset ecosystem, prohibiting financial institutions from handling anonymization technologies, and strengthening enforcement mechanisms.
However, the bill has faced significant criticism. Critics argue that the bill imposes an unrealistic burden on software developers and users by treating them like financial institutions. This reflects concerns about the constitutionality of the bill and its potential infringement on freedom of expression, which could force compliance with a stringent AML program. Moreover, the bill does not appear to address the resource-intensive nature of these compliance requirements and overlooks the effectiveness of existing blockchain analytics to combat illicit financial flows. The cryptocurrency community responded with significant criticism, questioning the scope of the problem the bill seeks to solve and the appropriateness of the proposed solutions.
Digital asset anti-money laundering laws face serious challenges while trying to bring digital assets into line with traditional financial system regulations. The participation of big banks in the drafting, along with its far-reaching implications and potential constitutional issues, has sparked heated debate. As the cryptocurrency industry continues to evolve, the need for balanced and effective regulation becomes increasingly clear.
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