The Crypto-Asset National Security Enhancement and Enforcement Act (CANSEE) has drawn heavy condemnation from prominent crypto advocacy organizations, igniting a fierce debate over the future of decentralized finance (DeFi).
Proposed by Senators Jack Reed (D-CT), Mark Warner (D-VA), Mike Rounds (R-KS), and Mitt Romney (R-UT) with bipartisan support, the measure seeks to impose strict controls on DeFi participants and platform operators.
Leading the charge against the bill, CoinCenter, an influential crypto advocacy group, and its executive director, Jerry Brito, vehemently oppose the proposed legislation.
In a strongly-worded statement released on July 20, they branded CANSEE as “messy, arbitrary, and unconstitutional,” expressing concerns about its potential chilling effects on free expression and innovation within the crypto sphere.
CoinCenter highlighted the bill’s troubling provision that would hold developers accountable for any criminal activity on their platforms, similar to companies facing penalties under the Bank Secrecy Act (BSA). They argue that such a content-based approach, targeting developers and protocol authors, could stifle technological advancement and severely hinder free speech.
Moreover, the proposed bill vests complete jurisdiction in the Secretary of the Treasury to select the individuals controlling specific protocols, raising fears of government overreach and centralized control over decentralized networks.
The Blockchain Association, another prominent crypto advocacy group, joined the chorus of opposition, releasing their reaction to CANSEE on July 19. The Association, represented by CEO Kristin Smith and its members, pointed out that just 0.24% of crypto transactions in 2022 were unlawful, asserting that existing law enforcement capabilities were sufficient to address criminal activity.
Calling the bill “unworkable” and “incompatible with digital asset technology,” the Blockchain Association emphasized their support for alternative initiatives to curb illicit behavior, such as proposed changes to a national defense statute focusing on crypto-related criminal activities.
Natalie Smolenski, a senior fellow at the BTC Policy Institute, echoed these concerns, suggesting that the bill was tantamount to an attempt to “outlaw decentralization.” The heated reaction from the crypto community has sparked a wider discussion on the balance between safeguarding against criminal activities and preserving the innovative potential of DeFi.
The proposed legislation faces significant hurdles, with CoinCenter and the Blockchain Association united against CANSEE. Advocacy groups are gearing up to challenge the bill through grassroots campaigns, public awareness efforts, and lobbying to protect the future of decentralized finance from what they perceive as an existential threat.
As the debate rages on, lawmakers must strike a delicate balance between safeguarding national security interests and fostering an environment that encourages technological innovation and financial inclusion in the dynamic world of decentralized finance. The outcome of this struggle will undoubtedly shape the future landscape of the crypto industry for years to come.
