Senator Elizabeth Warren and a coalition of senators have reignited their criticism of crypto-related fraud and money laundering.
The comments were made during a Senate Banking Committee hearing held on Thursday, with Warren pushing for stricter crypto laws.
Senator Warren’s Fresh Criticism
Warren, who has been highly critical of crypto, alleged that crypto was used for illicit finance and scams during a Senate Banking Community hearing. The senator has been pushing for the Digital Asset Anti-Money Laundering Act over the past year and has gained support from prominent senators, including Senator Lindsey Graham, R-S.C). The proposed legislation seeks to extend the Bank Secrecy Act’s requirements, such as Know Your Customer (KYC), to a broader range of crypto operations. This would be broadened to cover miners, validators, and wallet providers. Warren stated during the hearing,
“This bill would plug the holes in our anti-money laundering rules to make it easier for financial regulators to track suspicious crypto activity to make it more visible and to shut down the scammers.”
However, Warren’s proposed bill has met with some resistance, with crypto community members stating that it is unconstitutional and too far-reaching.
Senate Banking Committee Chair Shares Concerns
Meanwhile, Senate Banking Committee Chair Senator Sherrod Brown also voiced their concerns about crypto and its frequent use in scams. Brown stated,
“As we’ve seen in other hearings in the last three years, frauds and scams are not unique in consumer finance; they are also common within cryptocurrency. We will keep pushing to make our financial system safer – whether it’s stopping rampant frauds and scams in cryptocurrency or in apps and check fraud.”
Brown had recently stated he was in talks regarding a bill that would go after the use of digital assets in money laundering. Several other lawmakers are also working on crypto-related bills. This includes one led by Republicans. This bill takes a comprehensive approach to the crypto market structure and would also include an AML provision.
Stablecoin Criticism
During the hearing, Senator Warren was also critical of stablecoins, arguing that data showed stablecoins were used for most illicit crypto transactions. The reference was to a report by blockchain analytics firm Chainalysis, which stated that stablecoins accounted for a majority of all illicit transaction volume.
“This change also comes alongside recent growth in stablecoins’ share of all crypto activity overall, including legitimate activity. However, stablecoin dominance isn’t the case for all forms of cryptocurrency-based crime.”
Longstanding Concerns
The role of cryptocurrencies in illicit activities has been a source of concern among lawmakers. It has also caught the attention of the Biden administration, with Deputy Secretary Wally Ademeyo calling on Congress to give it more authority to go after illicit actors and activities in the digital asset space. Ademeyo had stated,
“We are calling on Congress to create a secondary sanction regime that will not only cut off a firm from the US financial system but will also expose any firm that continues to do business with the sanctioned entity to being cut off from the US financial system. This is a significant tool we do not request lightly. But we need to do everything in our power to make sure that groups like Hamas are not able to find safe haven within the digital asset ecosystem.”
Ademeyo stated that Dollar-backed stablecoin providers based outside the US must be unable to use the currency without proper procedures that can stop bad actors from taking advantage of the platform.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
