The United States might be looking towards regulating the decentralized sector of its crypto industry. According to recent news, Senator Elizabeth Warren has announced that a bill to that effect has been submitted to Congress. In the report, the Senator mentioned that the reintroduced bill would cover several aspects such as DeFi exchanges, DAO, and the like.
The US Senator wants DeFi entities to follow AML rules
The Senator was in attendance at the recent Banking Committee meeting on February 14. During the conference, the Senator, who has been consistently vocal about crypto, said that the participants would prefer the decentralized entities without following the basic AML rules.
She also clarified that the market participants want Congress to pass a law that would exempt them from following these rules so that they can carry out illicit activities in the sector. Warren clarified that bad actors and drug lords use most decentralized entities to launder funds worldwide. With this, the Senator plans to bring back the AML law she floated in 2022. Warren first introduced the bill on December 2022, with the bill looking to regulate the DeFi sector.
Warren explains the reasons for the proposed regulation
One of the issues the bill sought to tackle was using crypto mixers by banks and other related financial bodies. Mixers such as Tornado Cash has been frequently used by all and sundry across the crypto market to mask transaction data on the blockchain. The bill will also tackle the issue of using unhosted wallets for transactions. Such wallets would be required to undergo basic AML checks in their services.
The Senator noted a big hole in the crypto regulation regarding DeFi services. For example, Warren mentioned ShapeShift, which used the loophole to rebrand itself as a DeFi platform. She said the platform used the move to remove itself from being regulated, posting an invisible sign for bad actors to launder their money there. She stressed that all criminals have been using crypto and cited a typical example of North Korean hackers stealing and processing their stolen assets using Tornado Cash. She talked about the $20 billion lost to hackers last year as a typical example of the ills the sector has been covering up. The figure was backed up by analysis firm, Chainalysis in its report in January.