• The Digital Asset Anti-Money Laundering Act Of 2022 proposed by Senator Elizabeth Warren, would classify custodial wallets and unhosted wallet providers as money service businesses.
• The bill would also prohibit financial institutions from handling, using or transacting with digital asset mixers, privacy coins and other anonymity-enhancing technologies.
• This would infringe upon the first amendment by requiring software developers who enable the sending, receiving and signing of bitcoin transactions to obtain a money transmitter license.
Yesterday, the U.S. Senate proposed the Digital Asset Anti-Money Laundering Act Of 2022 — a bill that has sparked great concern amongst international human rights activists, as it is seen as unconstitutional and in direct violation of current consumer privacy regulations.
The proposed regulations of the bill are far-reaching and would have a deep impact on the cryptocurrency community. Section three, part a of the bill would classify custodial wallets and “unhosted wallet providers,” likely meaning developers of non-custodial wallets, as well as cryptocurrency miners, validators or other nodes that may act to validate or secure third-party transactions, independent network participants and other validators with control over network protocols as money service businesses. This would require anyone writing software which enabled the sending, receiving and signing of bitcoin transactions to obtain a money transmitter license.
Furthermore, section three, part d of the bill would prohibit financial institutions from handling, using or transacting with digital asset mixers, privacy coins and other anonymity-enhancing technologies, as specified by the secretary of the U.S. Treasury; and handling, using or transacting business with digital assets that have been anonymized.
The implications of these restrictions are clear — the enactment of the Digital Asset Anti-Money Laundering Act Of 2022 would be an egregious violation of the first amendment, as it would impose limits on the development of software and the use of privacy technologies. Indeed, the proposed bill would have a chilling effect on the development of cryptocurrency technologies, as developers would be subject to increased scrutiny and regulation.
Human rights activists have already expressed their deep concern about the bill and its potential implications. Not only does it undermine consumer privacy, but it also presents an indirect assault on the open source community and its ability to create and innovate.
It is thus essential that the bill be amended and stripped of its most repressive regulations. The cryptocurrency community and its ability to innovate must be preserved, and consumer privacy must be respected. Unless the bill is amended, these objectives will remain unfulfilled.