The Bank Policy Institute (BPI), a prominent organization advocating for the banking industry in the United States, has announced its support for Senator Elizabeth Warren’s efforts to tighten regulations for cryptocurrencies. Warren, along with three other senators, recently reintroduced the Digital Asset Anti-Money Laundering Act, a bipartisan legislation aimed at combatting money laundering and terrorism financing within the crypto industry. The BPI, despite often being criticized by Warren, has publicly backed this bill, according to a report from Bloomberg.
In a statement, the BPI expressed the belief that the existing anti-money laundering and Bank Secrecy Act framework should include provisions for digital assets. The organization is committed to defending the nation’s financial system against illicit finance in all its forms. The proposed bill, consisting of seven pages, would require digital-asset wallet providers, miners, and other blockchain validators to maintain records of customer identities. Furthermore, financial institutions would be prohibited from using digital asset mixers, such as Tornado Cash, which are designed to obfuscate blockchain data.
Warren, along with Democrat Joe Manchin from West Virginia and Republicans Roger Marshall from Kansas and Lindsey Graham from South Carolina, reintroduced the bill on Friday. Apart from customer identity tracking, the legislation would prompt the Treasury Department, Securities and Exchange Commission, and Commodity Futures Trading Commission to establish new examination processes to ensure compliance with anti-money laundering and terrorism financing requirements. The Massachusetts Bankers Association, AARP, the National Consumer Law Center, and the National Consumers League also support the bill.
While many applaud Warren’s proposed bill, not everyone in the crypto community agrees with its provisions. Tyler Winklevoss, co-founder of the Gemini crypto exchange, criticized the legislation in a tweet on July 28, suggesting that those opposing Warren’s bill are “doing the right thing.” This disagreement within the industry highlights the ongoing debate over the appropriate level of regulation for cryptocurrencies.
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Warren initially introduced the bill to the US Senate in December 2022, arguing that the current anti-money laundering laws do not adequately cover the crypto industry. During a Senate Banking Committee hearing titled “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers” on February 14, Warren called for crypto to be subjected to the same regulations as traditional banking institutions. She argued against exemptions for decentralized entities running on code, claiming that such loopholes would facilitate money laundering for individuals involved in illegal activities.
Gary Gensler, Chairman of the US Securities and Exchange Commission (SEC), is also a vocal critic of the crypto market. In a recent interview, Gensler expressed concerns about the prevalence of fraud in the crypto market, asserting that there are “far too many” bad actors. He emphasized that crypto investors should not assume they are protected by securities laws, as these regulations apply to many cryptocurrencies. Gensler highlighted the need for full, fair, and truthful disclosures for US investors, comparing the actions of some crypto platforms and intermediaries to practices that would never be allowed in traditional stock exchanges like the New York Stock Exchange or Nasdaq.
The ongoing discussions and debates surrounding crypto regulation illustrate the challenges faced by lawmakers and industry participants in finding the right balance between fostering innovation and protecting against illicit activities. As the popularity and usage of cryptocurrencies grow, it is increasingly important to establish robust regulatory frameworks that address the unique characteristics and risks associated with this emerging industry.
