Senator Elizabeth Warren's Digital Asset Anti-Money Laundering Act, aiming to enforce stricter regulations on the cryptocurrency sector, has raised concerns within the crypto community as it continuously gains support.
If passed, the legislation would expand Bank Secrecy Act obligations, including know-your-customer (KYC) regulations for miners, validators, wallet providers and other participants within the crypto industry.
Since its introduction and reintroduction in July 2023, the bill has gained considerable Senate support. Last Monday, five Democratic lawmakers, including three of Warren's colleagues on the Senate Banking Committee – Sens. Raphael Warnock (D-GA), Laphonza Butler (D-CA) and Chris Van Hollen (D-MD) – co-sponsored the bill.
Concerns among the crypto community
Pro-XRP lawyer and Crypto-Law.us founder John Deaton found that around 20 percent of senators back Senator Warren's "de facto ban" on cryptocurrencies, including Bitcoin (BTC), in the U.S. He believes that Warren is leveraging her reelection campaign to influence the cryptocurrency narrative.
"I know for a fact she is using her reelection as an opportunity to create and control the Crypto narrative," Deaton wrote on his X account. "She is the single biggest threat to freedom in the United States."
Deaton strongly opposes the bill, asserting that it poses a significant threat to personal freedoms in the U.S. He argues that if enacted, the legislation could significantly impact both the cryptocurrency industry and its stakeholders.
Deaton is not the only one protesting the bill. Other supporters of digital currencies also expressed similar concerns that excessively stringent regulations could impede technological innovation and advancements and weaken the U.S. position in the digital asset realm.
Coin Center's Director of Research, Peter Van Valkenburgh, expresses apprehensions regarding the bill's emphasis on financial surveillance and imposition of Know Your Customer (KYC) rules on crypto activities.
He mentions the absurdity of applying KYC regulations to actions such as running a node or holding Bitcoin (BTC) in a self-hosted wallet. When the bill is in place, every crypto user must provide personal information, such as names, addresses and even social security numbers, for every transaction they engage in. As non-compliance could result in prosecution, he believes this could eventually outlaw blockchain technology.
In addition, its focus on financial surveillance and KYC mandates for crypto activities raises worries about the potential criminalization of blockchain technology. In the end, the cryptocurrency community is looking for a regulation that safeguards innovation, economic progress and individual freedoms.
Despite these worries, Deaton doesn't anticipate the bill passing in the House of Representatives this year. However, he warns that a full Democratic sweep in 2024 could potentially pass segments of the bill as early as 2025, transforming the future trajectory of the crypto industry.
The Digital Asset Anti-Money Laundering Act is a direct attack on technological progress and also a direct attack on our personal privacy and autonomy.
Make no mistake, while proposed as a solution to potential money laundering and terrorist financing, the bill is in fact a… pic.twitter.com/8oID1wECGL— Neeraj K. Agrawal (@NeerajKA) December 11, 2023
Can the bill pass?
Deaton's criticism of the bill followed a warning from Ryan Selkis, Messari's founder, advising the community not to underestimate Warren's potential to impact the nation's digital landscape.
The crypto community rallies to protect their livelihood, wary of Senator Warren's influence even if her name doesn't appear on the likely-to-pass crypto bill.
Citing Tom Dunleavy, CIO at MV Capital, Selkis notes Senator Warren's past limited success in pushing legislation despite her vocal opposition to crypto. Dunleavy observes that none of the 344 bills Senator Warren has sponsored since 2015 have passed. However, unwavering opposition to digital assets casts a long shadow over the industry, putting the cryptocurrency community on edge.
The most recent bill she backed mandates the Financial Crimes Enforcement Network, with a focus on digital assets and related matters. Many industry members believe that preventing her Senate reelection, particularly in the upcoming elections, is the most effective strategy to oppose her anti-crypto initiatives.