Crypto regulation effort moving in Senate

9 months ago 203

Four U.S. senators with usually divergent policy points of view have agreed that there needs to be stricter control of digital asset trading.

When Sen. Elizabeth Warren (D-Massachusetts) introduced her Digital Asset Anti-Money Laundering Act last year (S. 5267), the lone cosponsor was Kansas Republican Sen. Roger Marshall.

The latest version of the bill (S. 2669) has added cosponsors Sen. Joe Manchin, the West Virginia Democrat who's often bucks his party's leaders, and Sen. Lindsey Graham (R-South Carolina), now a Donald J. Trump supporter.

Four lawmakers isn't many, but the group's agreement shows that Congress is starting to consider tighter controls on crypto more seriously.

Warren's bill would, according to its legislative language, require the Financial Crimes Enforcement Network, usually referred to as FinCEN, to issue guidance on digital assets, and "for other purposes."

Added oversight: Per the original bill's summary, those other purposes under FinCEN's rule making purview include —

establishing a rule classifying digital asset wallet providers, cryptocurrency miners, validators, and others as money service businesses subject to the Bank Secrecy Act (BSA);
mandating that U.S. persons to report cryptocurrency transactions through foreign accounts of over $10,000; and
requiring digital asset kiosk owners and administrators to submit and update every three months the physical addresses of the kiosks.

As for the bill's name, the legislation would task Treasury, the Securities and Exchange Commission, and the Commodity Futures Trading Commission with establishing a risk examination and review processes for anti-money laundering requirements for their respective regulated entities.

The one-page explanation of the latest version of the bill has more on its goals.

Attached to defense measure: While the bill itself has yet to make it out of committee, Politico reports that some of the digital crackdown language has been included in the defense policy bill the Senate passed last (Thursday, July 27) night.

The reason that Warren's bill has garnered more support is that she's focusing on the criminal uses of crypto currency.

"Crypto has become the payment method of choice for rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions of dollars in stolen funds, evade sanctions, fund illegal weapons programs, and profit off of devastating cyberattacks," said Warren in announcing the reintroduction of the bill.

"This bipartisan bill is the toughest proposal on the table to crack down on crypto crime and give regulators the tools they need to stop the flow of crypto to bad actors," she added.

Original cosponsor Marshall cut to the chase. "This legislation is a matter of national security," he said. That argument likely is one reason some of the bill's provisions were added to the defense bill.

In addition to drawing bipartisan (albeit limited) support on Capitol Hill, the crypto regulation bill has been endorsed by a wide range of private sector groups. They include the Bank Policy Institute, Massachusetts Bankers Association, Transparency International U.S., Global Financial Integrity, National District Attorneys Association, Major County Sheriffs of America, Massachusetts Sheriffs' Association, AARP, National Consumer Law Center, and National Consumers League.

Tax Felon Friday: In explaining why he is a cosponsor of Warren's digital regulation bill, Graham cited instances in which crypto "is used to move illicit funds for drug cartels, criminal gangs, terrorist groups and kidnappers."

Crypto crime also was a motivator for Manchin, who called on his Senate colleagues "on both sides of the aisle to support this commonsense legislation to protect Americans by preventing bad actors from using cryptocurrencies to finance their criminal activities."

That's enough crime reference for me, along with the Internal Revenue Service's continued interest in crypto, to add this Digital Asset Anti-Money Laundering Act update to the ol' blog's new end-of-week feature Tax Felon Friday.

You can read more tax crime posts, including those that were published long before I gave them a special designation, in the, what else, tax crimes category.

You'll find this post at the top of that category right now, so just scroll down for more.

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