Senators Elizabeth Warren (D-Mass) and Senator Roger Marshall (R-Kan) have launched the “Digital Asset Anti-Money Laundering Act Of 2022,” a invoice which might have sweeping impacts on the privateness of bitcoin customers.
If enacted, the invoice would require custodial and self-custodial pockets suppliers and miners to implement know-your-customer (KYC) methods. It might additionally prohibit monetary establishments from interacting with privateness instruments akin to CoinJoin in an effort to restrict the flexibility of customers to keep up their privateness. Whereas the invoice focuses on such measures so as to curb cash laundering, instruments akin to CoinJoin merely restore the customers’ means to make use of bitcoin in a manner that extra intently resembles bodily money. That’s, the financial institution is aware of when a consumer withdraws money at an ATM, however has restricted information of what any consumer does with it afterwards. This cash-like attribute is barely realized in cryptocurrencies by means of instruments akin to CoinJoins. Along with this, regulating our bodies could be allowed to file stories and surveil customers with out want for a warrant or authorities request.
Based on the invoice, it additionally requires a “rule classifying custodial and unhosted pockets suppliers, cryptocurrency miners, validators, or different nodes who might act to validate or safe third-party transactions, impartial community members, together with MEV searchers, and different validators with management over community protocols as cash service companies,” which might suggest that Bitcoin nodes could be categorized as akin to nicely.
The invoice seeks for the Monetary Crimes Enforcement Community (FinCEN) to implement the steering which, in keeping with blockchain advocacy group CoinCenter, “is essentially the most direct assault on the private freedom and privateness of cryptocurrency customers and builders we’ve but seen.”
Senator Elizabeth Warren has beforehand expressed her need to manage the cryptocurrency trade, most recently after the collapse of FTX. The invoice would seemingly face intensive scrutiny as, amongst many different points, it will pressure unhosted wallets suppliers to register earlier than publishing their merchandise, successfully putting limits on free speech, as code has been proven to be free speech.