Senate Coalition Grows to Address Crypto’s Role in Illegal Activities
A bipartisan coalition in the U.S. Senate is expanding its support for a bill proposed by Senator Elizabeth Warren aimed at cracking down on the use of cryptocurrencies in illicit finance. The bill, known as the Digital Asset Anti-Money Laundering Act, seeks to mitigate the risks associated with cryptocurrency by closing loopholes and bringing the digital asset ecosystem into compliance with anti-money laundering and counter-terrorism financing frameworks.
Joining Senator Warren as cosponsors of the bill are Senators Raphael Warnock, Laphonza Butler, Chris Van Hollen, John Hickenlooper, and Ben Ray Luján. The expanded coalition hopes to address the concerns raised by the Treasury Department regarding the use of cryptocurrencies by terrorist groups, rogue nations, drug lords, ransomware gangs, and fraudsters to launder funds, evade sanctions, finance illegal weapons programs, and profit from cyberattacks.
However, critics argue that the proposed legislation poses a threat to personal freedom and privacy for crypto users. They claim that the lack of legal safeguards around cryptocurrencies exposes Americans to potential risks. Nevertheless, supporters argue that applying transparency rules to cryptocurrencies is necessary to protect individuals and prevent these digital assets from being used for illegal purposes.
In addition to Senator Warren’s bill, a number of organizations have endorsed the measure, including the Bank Policy Institute, Massachusetts Bankers Association, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, Massachusetts Sheriffs’ Association, AARP, National Consumer Law Center, and National Consumers League.
The Digital Asset Anti-Money Laundering Act would extend the responsibilities of the Bank Secrecy Act, including know-your-customer requirements, to digital asset wallet providers, miners, validators, and other participants in cryptocurrency networks. The bill would also address the issue of “unhosted” digital wallets and strengthen the enforcement of compliance with anti-money laundering regulations.
While concerns about the illicit use of cryptocurrencies persist, it is worth noting that less than 1% of the trillions of dollars transacted in crypto each year are linked to illicit activities. Comparatively, the UN estimates that between 2% to 5% of global GDP is used for illicit activities and money laundering through the traditional banking system and cash.