It seems that every time Massachusetts Senator Elizabeth Warren fails to get an anti-crypto bill passed, she introduces a new draft. She has the strategy of messaging bills — legislation introduced for the purposes of media attention and fundraising more than actual passage — down to a science.
Warren’s latest legislation, the Digital Asset Anti-Money Laundering Act, threatens to undermine crypto’s core principles of freedom and personal sovereignty. While Warren argues that her bill is necessary to combat illicit activities, a closer look reveals its potential to stifle innovation, endanger user privacy and play right into the hands of big banks.
The bill, co-sponsored by Kansas Senator Roger Marshall, is based on the premise that digital assets are increasingly being used for criminal activities such as money laundering, ransomware attacks and terrorist financing. While some bad actors exploit digital assets, the bill’s approach of treating all developers and wallet providers as potential criminals is not only impractical but also dangerous.
The most dangerous part of the bill is the requirement that digital asset developers comply with Bank Secrecy Act (BSA) responsibilities and Know Your Customer (KYC) requirements. This effectively places the burden of law enforcement on the shoulders of software developers. It’s akin to requiring car manufacturers to be responsible for how their vehicles are used on the road.
The Digital Asset Anti-Money Laundering Act of 2023
The bill further seeks to eliminate privacy tools that protect crypto users from malicious actors. By cracking down on digital asset mixers and anonymity-enhancing technologies, Warren’s proposal threatens the privacy rights of law-abiding citizens. It’s essential to remember that privacy is a fundamental right, not a privilege that can be discarded at will. A number of early Bitcoin (BTC) millionaires have been kidnapped and tortured as a direct result of the transparency of the Bitcoin blockchain. Warren would leave future Bitcoiners defenseless against such threats.
While she claims to be acting in the name of national security, it’s worth noting that the big banks would benefit greatly from limiting the competition posed by cryptocurrencies. By imposing onerous regulations, the bill would make it difficult for crypto to compete on a level playing field.
But what about the argument that digital assets are being used by rogue nations and criminal organizations? While this is a valid concern, it’s crucial to distinguish between the technology itself and the actions of a few. The same argument could be applied to cash, which has been used for illegal activities for centuries. Banning cash would be an overreaction, just as overly restrictive crypto regulations are.
Breaking: Elizabeth Warren’s latest proposed anti-crypto legislation
Sen. Warren has co-sponsored the Digital Asset Anti-Money Laundering Act of 2023.
Says the legislation aims to:
-combat the “rising” misuse of digital assets. -close regulatory “gaps.” -extends Bank… pic.twitter.com/cl0L95Fyaj
One major concern is the bill’s approach to “unhosted” digital wallets, which allow individuals to bypass Anti-Money Laundering (AML) and sanctions checks. While preventing illicit transactions is crucial, the bill’s proposed rule to require banks and money service businesses to verify customer identities and file reports on certain transactions involving unhosted wallets may have unintended consequences.
Forcing individuals to provide personal information for every transaction goes against the very principles that have drawn people to cryptocurrencies — privacy and pseudonymity. It’s important to strike a balance between security and individual rights. Overregulation could drive users away from regulated platforms, pushing them into unregulated, more challenging-to-track environments.
Additionally, the bill’s focus on directing the United States Financial Crimes Enforcement Network to issue guidance on mitigating the risks of handling anonymized digital assets seems to misunderstand the core tenets of blockchain technology. Cryptocurrencies like Bitcoin are designed to be transparent yet pseudonymous. Trying to eliminate this pseudonymity jeopardizes one of the key features that make blockchain secure and appealing to users.
Another significant issue is the potential overreach in extending BSA rules to include digital assets. Requiring individuals engaged in transactions over $10,000 in digital assets through offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) may be excessive. It could result in unnecessary burdens on individuals who use digital assets for legitimate purposes, such as cross-border remittances or investments.
Warren’s bill is a sledgehammer approach to a nuanced problem. Rather than stifling innovation and privacy, a more balanced approach would be to target specific criminal activities and individuals. The current AML system, which large crypto exchanges comply with, has been effective at interdicting illicit crypto usage, which is why isolated instances have been reported.
The Digital Asset Anti-Money Laundering Act is a deeply flawed piece of legislation. Warren’s bill poses a real threat to the crypto community and risks playing right into the hands of big banks. It’s essential that we find a more balanced and effective solution that addresses the concerns without stifling the potential of this transformative technology.
J.W. Verret is an associate professor at George Mason University’s Antonin Scalia Law School. He is a practicing crypto forensic accountant and also practices securities law at Lawrence Law LLC. He is a member of the Financial Accounting Standards Board’s Advisory Council and a former member of the SEC Investor Advisory Committee. He also leads the Crypto Freedom Lab, a think tank fighting for policy change to preserve freedom and privacy for crypto developers and users.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
A minister has defended Sir Keir Starmer’s decision to discipline rebellious MPs, saying they would have used “stronger” language against those who are “continually causing trouble”.
Home Office minister Jess Phillips told Sky News’ Matt Barbet that Labour MPs were elected “as a team under a banner and under a manifesto” and could “expect” to face disciplinary action if they did not vote with the government.
Image: Brian Leishman, Chris Hinchliff, Neil Duncan-Jordan and Rachael Maskell.
Pic: Uk Parliament
Brian Leishman, Chris Hinchliff, Neil Duncan-Jordan and Rachael Maskell all lost the whip, meaning they are no longer part of Labour’s parliamentary party and will sit as independent MPs.
Labour backbenchers lined up to criticise the move last night, arguing it was a “terrible look” that made “a Reform government much more likely”.
But speaking to Sky News, Ms Phillips said: “We were elected as a team under a banner and under a manifesto, and we have to seek to work together, and if you are acting in a manner that is to undermine the ability of the government to deliver those things, I don’t know what you expect.
“Now I speak out against things I do not like, both internally and sometimes externally, all the time.
“There is a manner of doing that, that is the right way to go about it. And sometimes you feel forced to rebel and vote against.”
Referring to a description of the rebels by an unnamed source in The Times, she said: “I didn’t call it persistent knob-headery, but that’s the way that it’s been termed by some.”
She said she would have described it as “something much more sweary” because “we are a team, and we have to act as a team in order to achieve something”.
More than 100 MPs had initially rebelled against the plan to cut personal independent payments (PIP). Ultimately, 47 voted against the bill’s third reading, after it was watered down significantly in the face of defeat.
Three other MPs – who also voted against the government – have had their trade envoy roles removed. They are Rosena Allin Khan, Bell Ribeiro-Addy and Mohammed Yasin.
However, it is understood this was not the only reason behind the decision to reprimand all seven MPs, with sources citing “repeated breaches of party discipline”.
Mr Hinchliff, the MP for North East Hertfordshire, proposed a series of amendments to the flagship planning and infrastructure bill criticising the government’s approach.
Mr Duncan-Jordan, the MP for Poole, led a rebellion against the cut to the winter fuel payments while Alloa and Grangemouth MP Mr Leishman has been critical of the government’s position on Gaza as well as the closing of an oil refinery in his constituency.
Ian Byrne, the Labour MP for Liverpool West Derby, wrote on X on Wednesday that the prime minister’s actions “don’t show strength” and were “damaging Labour’s support and risk rolling out the red carpet for Reform”.
Leeds East MP Richard Burgon added that “challenging policies that harm our communities” would “make a Reform government much more likely”.
Ian Lavery, Labour MP for Blyth and Ashington, warned the suspensions were “a terrible look”.
“Dissatisfaction with the direction the leadership is taking us isn’t confined to the fringes,” he wrote.
I’m going to level with you – I am very, very confused.
In fact, I’ve got five reasons why I’m very confused.
The first reason I’m confused is because this is meant to be a show of strength, but most people have literally never heard of these four individuals.
Rachael Maskell is a bit well-known, but if this is intended to impress the public, then I’m not sure the public will notice.
Secondly, if it’s about installing discipline in the parliamentary Labour Party, I’m confused about that. Surely Sir Keir Starmer‘s aim right now should be to unite the parliamentary Labour Party rather than divide it.
After the welfare rebellion, the promise was to listen. Starmer gave interviews saying he was going to create policy more sympathetic to his party.
It was only yesterday morning that Work and Pensions Secretary Liz Kendall said the government’s welfare reforms were in the “right place” – yet the people who helped get them there are suspended.
Suspended for agreeing with what is now government policy is an odd look.
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5:27
Sir Keir Starmer has suspended four MPs from the parliamentary Labour Party for ‘repeated breaches of discipline’.
Fourth, I’m confused at who the most prominent individual to be suspended is – Rachael Maskell.
She was on Sky News within minutes of the suspension looking genuinely surprised and really rather upset.
Now, there’s absolutely no doubt she was a ringleader in this rebellion. Eight days ago, she authored an article in the New Statesman discussing how to organise a government rebellion – so I think that’s pretty much case closed.
But Rachael is of the soft left, not the hard left. And who else is on the soft left? It’s Starmer.
It does feel as if the prime minister is slightly coming for people who have dangerously similar views to him.
I understand this is all about drawing hard lines and showing who’s on your team and who isn’t.
But some of that line looks like it goes awfully close to people that you really wouldn’t want to be on the wrong side of if you’re prime minister.
And finally, three other MPs – Rosena Allin-Khan, Bell Ribeiro-Addy and Mohammed Yasin – have been sacked from their trade envoy jobs. They do retain the party whip.
But here’s the thing that hurts your head: if you are a Lib Dem trade envoy, like Sarah Olney, or if you’re a Tory trade envoy, as George Freeman was until a couple of weeks ago when he was suspended, you do not have to obey the whip – and you can continue to keep your trade envoy role.
But if you’re in the Labour Party and you’re a trade envoy, you do have to obey the whip.
And it’s just one of those mad inconsistencies where if you’re in another party, you can keep your trade envoy role, if you’re in the governing party, you can’t. That just doesn’t make sense at all.
So there are my five reasons why I’m completely confused.