Sen. Warren promises to reintroduce the AML bill that extends to DAOs and DeFi
A bipartisan anti-money laundering (AML) bill covering “decentralized entities” such as decentralized finance protocols (DeFi) and DAOs will soon be reintroduced before Congress, according to US Senator Elizabeth Warren.
Warren, a vocal crypto critic, argued at the February 14 Senate Banking Committee hearing titled “Crypto Crash: Why Financial System Safeguards are Needed for Digital Assets” that the crypto community wants decentralized entities running on code to be exempt from AML requirements:
“In other words, they want a giant loophole for DeFi written into the law so they can launder money when a drug lord or a terrorist pays them to do it.”
Because of this, Warren said she would reintroduce the Digital Asset Anti-Money Laundering Act of 2022 that she first introduced on December 15, 2022. It was read twice before being referred to the Senate Banking Committee and has received no further support. since.
If enacted as it was, the seven-page bill would have banned financial institutions from using digital asset mixers like Tornado Cash, which are designed to hide blockchain data.
It would also have required unhosted wallets, miners and validators to write and implement AML policies.
Noting current AML laws “do not cover much of the crypto industry,” the senator claimed that crypto exchange ShapeShift took advantage of the lack of regulation when it restructured as a DeFi platform in July 2021, adding:
“They said we’re making this shift, quote, ‘to remove themselves from regulated activity.’ Translation: Launder your money here.”
Claiming that “major financial criminals love crypto,” Warren claimed that crypto was the “method of choice for international drug traffickers,” North Korean hackers and ransom attackers, adding:
“The crypto market took in $20 billion last year in illegal transactions, and that’s only the part we know about.”
These figures are supported by a January 12 report from blockchain analytics firm Chainalysis, which found that the total cryptocurrency value received by illegal addresses reached $20.1 billion throughout 2022.
Related: US lawmakers and experts debate SEC’s role in crypto regulation
According to a UN official speaking at a meeting of the Counter-Terrorism Committee in October 2022, cash is still the preferred choice for financing terrorists, although they are starting to turn to crypto more often.
North Korean hackers operating with the Lazarus Group have also faced headwinds trying to use crypto with exchanges Binance and Huobi again freezing accounts, and in the process for millions of crypto, linked to the infamous outfit.
