• US Senator Elizabeth Warren claims that drug lords, “rogue nations” and other criminals are using crypto to launder money.
• She proposed a bill called the Digital Asset Anti-Money Laundering Act of 2022 which would make crypto comply with traditional financial system rules.
• The bill could also affect legitimate crypto activities as it would effectively ban digital assets in the US.
Senator Warren Claims Crypto Used to Launder Money
US Senator Elizabeth Warren has warned that “rogue nations, oligarchs, and drug dealers” are using cryptocurrency to launder billions of dollars in stolen funds, evade sanctions, and finance terrorism. She has proposed the Digital Asset Anti-Money Laundering Act of 2022 which would close loopholes and apply common-sense rules to the industry.
Criminal Use of Cryptocurrency
According to Warren, criminals such as drug traffickers and ransomware attackers use cryptocurrency to launder illicit funds. She stated at a Senate Banking hearing that “the rules should be simple: same kind of transaction, same kind of risk, means the same kind of rules”. The proposed bill could have an effect on legitimate crypto activities by effectively banning digital assets in the US.
Implications for Legitimate Crypto Activities
The Blockchain Association’s chief policy officer Jake Chervinsky believes that the bill could have severe implications for legitimate crypto activities such as mining and staking while doing nothing to combat illicit finance. He explained that this is why Senator Warren is having difficulty finding co-sponsors for her proposed legislation.
The Digital Asset Anti-Money Laundering Act aims to make cryptocurrency comply with money laundering regulations similar to those used in traditional financial systems. If passed into law it will put restrictions on digital asset transactions by requiring companies dealing with cryptocurrencies to follow certain procedures when dealing with customers’ funds.
It remains unclear if Senator Warren’s proposed legislation will be successful but it highlights an important issue regarding criminal activity involving cryptocurrencies and how it can be addressed through regulation. As more countries begin developing their own frameworks for regulating cryptocurrencies, this issue is likely to become even more significant in the future.