Title: Wall Street Banks Back Elizabeth Warren’s Digital Asset Anti-Money Laundering Act
Introduction
In a surprising turn of events, Wall Street banks have thrown their support behind U.S. Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act. The legislation aims to mitigate national security risks associated with cryptocurrencies, an area where Warren and the banks have found common ground. This article will delve into the details of the bill and explore why Wall Street is backing it.
Cracking Down on Crypto Crime
The Digital Asset Anti-Money Laundering Act, first introduced in December 2022 and recently reintroduced by Senator Warren, seeks to impose the obligations of the Bank Secrecy Act (BSA) on various crypto entities, including wallet providers, miners, and validators. If passed, the bill will require crypto service providers and network participants to adhere to know-your-customer (KYC) requirements.
Supporters of the bill argue that cryptocurrencies have become the preferred payment method for cybercriminals. Senator Warren highlighted her intention to crack down on crypto crime, stating that the legislation “is the toughest proposal on the table to give regulators the tools they need to stop the flow of crypto to bad actors.”
Key Provisions of the Digital Asset Anti-Money Laundering Act
The bill, spanning seven pages, consists of several critical provisions aimed at strengthening regulations on cryptos:
1. Compliance Examination and Review Process: The Treasury Department will be responsible for establishing a process to ensure compliance with anti-money laundering and countering the financing of terrorism (AML/CFT) obligations under the BSA. Similar review processes will be instituted by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) for crypto businesses under their purview.
2. Report of Foreign Bank and Financial Accounts (FBAR): Crypto businesses must file FBARs with the Internal Revenue Service whenever any U.S. customer conducts crypto transactions over $10,000 through offshore accounts.
3. Closure of Regulatory Gap: The bill directs the Financial Crimes Enforcement Network (FinCEN) to implement a proposed rule from 2020 aimed at closing regulatory gaps caused by self-custody wallets. This rule will mandate banks and money service businesses to verify customer and counterparty identities, maintain records, and file reports for specific crypto transactions involving self-custody wallets or wallets hosted in non-compliant jurisdictions.
4. Regulating Crypto ATMs: FinCEN will be tasked with ensuring that ATM owners and administrators regularly report and update the physical addresses of their kiosks. ATM operators must also verify customer and counterparty identities for all transactions.
5. Addressing Anonymity-Enhancing Technologies: FinCEN will provide guidance to financial institutions on managing risks associated with handling, using, or transacting with cryptocurrencies whose origins have been obscured using mixers or other anonymity-enhancing technologies.
Aligning Crypto Businesses with Banking Standards
Supported by Senator Warren, Senator Roger Marshall, and Senator Lindsey Graham, the bill aims to establish regulatory measures for crypto businesses that parallel those applied to banks. According to Senator Marshall, the reforms outlined in the legislation will enable the fight against digital asset threats, utilizing proven methods that domestic financial institutions have already complied with for years. Senator Graham also emphasizes that many of the rules applicable to traditional currencies like the dollar should extend to cryptocurrency.
Conclusion
The support of Wall Street banks for Elizabeth Warren’s Digital Asset Anti-Money Laundering Act is a significant development in the ongoing discourse surrounding cryptocurrency regulation. With the need to combat crypto-related crimes and protect national security, the bipartisan bill seeks to impose banking standards on the crypto industry. If successfully passed, the legislation will establish a comprehensive framework for addressing the risks posed by cryptocurrency transactions and contribute to a safer and more regulated digital asset landscape.
