Wed. Feb 1st, 2023

• Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Kan) have proposed the “Digital Asset Anti-Money Laundering Act Of 2022,” a bill that would require custodial and self-custodial wallet providers and miners to implement know-your-customer (KYC) systems and prohibit financial institutions from interacting with privacy tools such as CoinJoin.
• The bill would also allow regulating bodies to file reports and surveil users without need for a warrant or government request, and classify Bitcoin nodes as money service businesses.
• According to blockchain advocacy group CoinCenter, this bill “is the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we’ve yet seen.”

The introduction of the Digital Asset Anti-Money Laundering Act Of 2022, a bill proposed by Senators Elizabeth Warren (D-Mass) and Roger Marshall (R-Kan), has raised serious concerns among the cryptocurrency community. If passed, the bill would have sweeping impacts on the privacy of Bitcoin users, requiring custodial and self-custodial wallet providers and miners to implement know-your-customer (KYC) systems. Additionally, financial institutions would be prohibited from interacting with privacy tools such as CoinJoin, which restore the users’ ability to use Bitcoin in a way that more closely resembles physical cash.

The bill also calls for a “rule classifying custodial and unhosted wallet providers, cryptocurrency miners, validators, or other nodes who may act to validate or secure third-party transactions, independent network participants, including MEV searchers, and other validators with control over network protocols as money service businesses,” which would imply that Bitcoin nodes would be classified as such as well. This would result in Bitcoin nodes being subject to the same regulations as traditional banks and financial institutions.

Furthermore, the bill would allow regulating bodies to file reports and surveil users without need for a warrant or government request. According to blockchain advocacy group CoinCenter, this bill “is the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we’ve yet seen.”

The bill has sparked a great deal of debate among cryptocurrency users, with many voicing their support for measures that protect against money laundering, while also advocating for the privacy of users. With the bill being introduced in the US Senate, it remains to be seen whether it will pass or not and what implications it would have for the future of cryptocurrency.

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