Elizabeth Warren’s Crypto Bill Gaining Momentum for Noncustodial Wallet Crackdown
Support for the Digital Asset Anti Money Laundering is growing in the United states Senate.Act
- The Digital Asset Anti-Money Laundering Act has received support from 9 new Senators.
- Elizabeth Warren and Roger Marshall sponsor the bipartisan bill.
- It proposes reigning in the anonymous use of noncustodial wallets.
In the latest congressional bid to pass crypto regulation in the United States, Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.) have spearheaded a bipartisan bill known as the ‘‘Digital Asset Anti Money Laundering Act,” (DAAMLA).
First introduced in December 2022, the DAAMLA was reintroduced in August after the initial version of the text failed to garner enough support. However, in a promising sign for its future prospects, nine additional Senators declared their support for the DAAMLA on Friday.
Leading Democrats Back Warren-Marshall Bill
According to a statement released by Senator Warren, the latest supporters of the bill include eight Democratic senators and the independent Senator Angus King.
Significantly, high-ranking Democratic leaders in the Senate are among the bill’s latest backers.
Garry Peters, who chairs the Senate Homeland Security and Governmental Affairs Committee, and Dick Durbin, who chairs the Senate Judiciary Committee, have now thrown their weight behind the DAAMLA.
“Cybercriminals use cryptocurrencies,” because they are able to “evade existing anti-money laundering controls,” said Peters.
“This bill will help close loopholes and strengthen the tools needed to counter the illicit use of cryptocurrencies by bad actors and protect our national security,” he added.
Likewise, Senator Durbin cautioned that “without proper regulation, crypto will continue to be used by bad actors to launder billions of dollars while sidestepping the anti-money laundering framework traditional financial institutions follow.”
“I’m supporting the Digital Asset Anti-Money Laundering Act to ensure crypto is subject to existing regulations,” he remarked.
The Latest Attempt at Bipartisan Crypto Regulation
Upon its debut, the bipartisan ambitions of the DAAMLA distinguished it from several other Congressional attempts at passing crypto regulation.
In addition to Senator Marshall, Senators Joe Manchin (D-W.Va.) and Lindsey Graham (R-S.C.) also joined the cross-party coalition supporting the bill.
Commenting on the initiative recently, Senator Manchin said, “I am thrilled to see my colleagues on both sides of the aisle join this commonsense legislation to protect Americans.”
“Our bipartisan bill would help fight back against terrorist organizations and rogue state actors, such as Russia and North Korea, who use crypto to bankroll illicit activities,” he claimed.
However, that initial bipartisanship appears to have faltered, and no new Republican Senators have backed Warren and Marshall’s initiative.
Republican Support Falters
The DAAMLA’s co-sponsors are well-known crypto hawks, who have not shied away from outwardly criticizing the industry as a whole.
In a now-infamous campaign tweet earlier this year, Warren claimed to be building an “anti-crypto army.” The statement marked the Massachusetts Senator out as a key crypto critic in Congress and standard bearer for stricter regulations.
Marshall, a minority among conservative Republicans, prioritizes curbing cryptocurrency misuse over resisting government market intervention.
In 2022, he assailed crypto as “a national security threat” and even suggested regulators should be able to impose restrictions on its use.
“Right now, we’re not even close to having our arms around it,” he said, adding that “we should be considering a pause using this as a currency.”
Yet, despite a few exceptions, congressional Republicans have been far less eager than Democrats to call for stricter crypto regulations.
During the presidential primaries, for example, candidates including Vivek Ramaswamy and Senator Tim Scott have criticized the tough stance of some lawmakers.
Most recently, Scott recently lambasted the Securities and Exchange Commission Chair Gary Gensler for regulating the crypto sector “beyond the SEC’s scope,” in a way that “will ultimately stifle innovation.”
Bill Targets Non-Custodial Wallets
To bring cryptocurrency transactions in line with AML rules that govern traditional finance, the Warren-Marshall Bill would extend the requirements of the Bank Secrecy Act (BSA) to digital wallet providers.
Of course, many cryptocurrency exchanges and third-party wallet providers already enforce Know-Your-Customer (KYC) rules.
However, the proposed bill argues that self-custody or “unhosted” wallets, “allow individuals to bypass AML and sanctions checks.”
To crack down on the anonymous use of non-custodial wallets, the DAAMLA proposes introducing new rules that limit how banks and other financial institutions can interact with them.
For example, they must verify customer and counterparty identities, maintain records, and report transactions involving unhosted wallets or wallets hosted in jurisdictions that are not BSA compliant.They would also need to report all off-shore crypto transactions valued at over $10,000 to the Internal Revenue Service (IRS).
