• US Senator Elizabeth Warren is set to reintroduce an Anti-Money Laundering (AML) bill that covers decentralized financial (DeFi) protocols and decentralized autonomous organizations (DAOs).
• The AML bill is aimed at closing the loophole that allows for money laundering activities with DeFi.
• Warren argued that crypto was “the method of choice for international drug traffickers, North Korean hackers and ransomware attackers”.
Senator Warren Introduces AML Bill
Senator Elizabeth Warren has announced her intention to re-introduce the Digital Asset Anti-Money Laundering Act of 2022, a bi-partisan bill designed to close loopholes in existing anti-money laundering laws. The bill seeks to extend existing regulations to cover decentralized finance (DeFi) protocols and decentralized autonomous organizations (DAOs).
Closing Loopholes For Money Laundering
The proposed legislation is intended to prevent certain financial institutions from using digital asset mixers such as Tornado Cash, which are designed to obfuscate blockchain data. It would also require unhosted wallets, miners, and validators to write and implement AML policies. According to Warren, these measures are necessary in order to prevent big-time financial criminals from taking advantage of the current lack of regulation when it comes to DeFi.
Crypto Used For Illicit Transactions
Warren argued that the crypto market took in $20 billion last year from illicit transactions alone—a figure backed up by a January 2021 report from blockchain analytics firm Chainalysis. She warned that allowing unregulated entities such as DeFi platforms would only exacerbate the problem of money laundering and other criminal activities facilitated by cryptocurrencies.
Exemptions From AML Laws?
The Senator did not expand on any further details about the upcoming bill but suggested that DeFi should not be exempt from AML laws. This statement appears contrary to recent arguments made by some in the crypto community who have sought exemptions for certain entities under the guise of promoting innovation within the industry.
Regulations Necessary To Ensure Market Stability
Overall, Senator Warren believes that implementing proper regulatory frameworks within the cryptocurrency sector is essential if we want a stable and secure market. Without regulation there will always be opportunities for those intent on exploiting cryptocurrencies for illegal purposes such as money laundering or terrorist financing.