In an unprecedented move, Senators, spearheaded by Elizabeth Warren (D-MA), are targeting US history’s most stringent cryptocurrency restrictions. Notably, transactions exceeding $10,000 in cryptocurrencies may soon need legal reporting.
The Drive Behind the Action by Multiple US Senators
Senator Elizabeth Warren of Massachusetts isn’t new to the crypto critique. This recent move represents another step in her quest to mitigate the ties between criminal activities and digital currencies. Her proposal gains momentum with backing from an eclectic mix of politicians.
Teaming up with Senators Roger Marshall (R-KS), Joe Manchin (D-WV), and Lindsey Graham (R-SC), Warren has reintroduced the Digital Asset Anti-Money Laundering Act. Should this legislation be approved, industries handling over $10,000 in offshore digital transactions must submit a Report of Foreign Bank and Financial Accounts (FBAR) to the IRS. While Senators Marshall and Warren present the bill, Senators Manchin and Graham stand firmly as cosponsors.
Implications for the Crypto Industry
The ripple effects of this bill would be broad-reaching. Cryptocurrency wallet providers and validators would soon find themselves classified as financial institutions. Beyond the $10,000 transaction reporting rule, these entities would be tasked with red-flagging potential money laundering or tax evasion activities.
Initially tabled in December 2022, this legislation mirrors existing laws governing non-digital assets. Furthermore, the Act would place additional burdens on crypto ATM proprietors. Should the bill be enacted, the onus will be on the Financial Crimes Enforcement Network (FinCEN) to regularly acquire and update these ATM physical addresses. Additionally, ensuring customer identity verification would be paramount. A startling revelation, especially for those allegedly using crypto ATMs for money laundering.
Digital asset businesses won’t be exempt. The proposed Act emphasizes rigorous identity verification for self-custody wallets and enhancing compliance processes.
Warren’s Perspective on the Matter
This bill undoubtedly threatens the underlying vision of digital independence. Warren, in a statement, expressed her concerns candidly. She emphasized, “Crypto is increasingly the go-to for illicit activities, from ransomware attacks to illegal arms deals. This bipartisan bill offers robust measures to curb such misuse and equip regulators aptly.”
Warren’s reservations about digital assets range from NFTs to stablecoins. In a recent move on August 2, Warren, alongside three senators, advocated for tighter tax norms addressing “crypto brokers”. Their concerns didn’t stop at the IRS’s door as the US Treasury received the same call for stricter regulations.
Legislators are acting swiftly as the US grapples with the rapid rise of digital currencies. Whether these regulations will be seen as protective measures or constraints remains debatable.
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