Senator Elizabeth Warren is pushing for the reintroduction of a bill that would extend anti-money laundering (AML) regulations to decentralized autonomous organizations (DAOs) and decentralized finance (DeFi) platforms.
Warren argues crypto AML exemption is a danger
At the Senate Banking Committee’s hearing on Feb. 14th, 2023, titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets,” Warren argued that the crypto community is strong-hearted on decentralized entities running on code’s exemption from anti-money laundering (AML) requirements.
Warren said she would reintroduce the Digital Asset Anti-Money Laundering Act of 2022, first presented on Dec. 15, 2022.
The proposed legislation, which spans seven pages, seeks to outlaw financial institutions’ use of digital asset mixers. These mixers, like Tornado Cash, are designed to mask blockchain data and prevent tracking. If passed, the bill would prohibit their use.
Warren believes the lack of AML legislation in DeFi platforms serves as a loophole, where people can mask finances obtained via illegal means using the law.
Some crypto community members have argued that these platforms should not be subject to the same AML regulations as traditional financial institutions since they do not have the same control over user transactions.
Warren’s dedication to crypto legislation
Senator Warren’s efforts primarily focus on protecting individual investors and consumers from the potential risks and abuses associated with digital assets. She has raised concerns about the lack of regulatory oversight in the cryptocurrency space and called for greater transparency and accountability from companies involved in this market.
In 2021, Senator Warren introduced the “Digital Asset Market Structure and Investor Protection Act,” which aims to establish a comprehensive regulatory framework for digital assets. The bill would require digital asset marketplaces to register with SEC and CFTC and give these agencies greater oversight and enforcement powers over the digital asset market.
Additionally, in December 2022, Senator Warren was strongly vocal about cryptocurrency exchanges and other companies involved in the digital asset market. This was in the wake of the collapse of the crypto exchange FTX. Warren pushed for greater protections for investors vulnerable to fraud or other forms of financial abuse.
Despite her efforts to protect consumers, Senator Warren’s stance on cryptocurrencies has drawn criticism from some in the crypto community who see her proposals as overly restrictive and potentially harmful to innovation.
However, her advocacy for greater transparency and accountability in this rapidly evolving market has received praise from many consumer advocates and policymakers.