Table of Contents
- Sen. Warren Emerges as Lead Lawmaker on Crypto Oversight
- Warren Cites Issues of National Security Among Her Concerns
- Crypto Advocates Reject Warren’s Assertions
- There is Widespread Support For Warren’s Approach to Cryptocurrencies
The regulatory action taken against cryptocurrencies as of the beginning of the year is unprecedented. Adding to the industry’s woes is Senator Elizabeth Warren, who is now cultivating an anti-crypto coalition under U.S. politicians.
Elizabeth Warren has identified herself as the official thorn in crypto’s side. The Massachusetts Democrat is now trying to recruit a host of politicians to join her in her crusade. A recent piece by POLITICO reveals Sen. Warren’s attempts to recruit conservative Senate Republicans to join her cause and has unfortunately been gaining traction in her effort. Warren has seen the most support from bank lobbyists, who, for their own (selfish) reasons, want to stop further digital asset startups from seeing the light of day.
Sen. Warren Emerges as Lead Lawmaker on Crypto Oversight
Senator Warren, a member of the Senate Banking, Housing, and Urban Affairs Committee, has established herself as Washington’s lead lawmaker on crypto oversight. In September 2022, Warren sent a letter to Treasury Secretary Janet Yellen calling on Treasury and the Financial Stability Oversight Council (FSOC) to establish a robust regulatory framework for the crypto sector. The Senators voiced her concerns over the industry by saying:
I am deeply concerned by the volatility of the cryptocurrency market and the inadequate regulatory environment in which crypto scams, fraud, theft, and evasion continue to run rampant and mom-and-pop investors’ savings have evaporated. I urge you to take steps, both in your capacity as Treasury Secretary and as Chair of the Financial Stability Oversight Council, to protect the integrity of the American sanctions regime, reduce the effects of climate change and the burden on our energy infrastructure, ensure the safety and stability of our financial system, and protect consumers and investors.
Warren Cites Issues of National Security Among Her Concerns
Part of Warren’s anti-crypto campaign is trying to gather support for a bill that would have far-reaching implications for the sector. According to POLITICO, Warren’s bill would include more onerous anti-money laundering restrictions, including requirements for more crypto service providers to verify their customers’ identities. Clearly, Warren is not concerned with issues of privacy, decentralization, and the very core of what makes cryptocurrencies so revolutionary – the absence of government involvement and interference.
The Senator is citing issues of national security as her focus for crypto legislation but raises concern about many issues, including consumer protection and environmental impact. One of the main issues Warren’s legislation wants to zero in on is money laundering. She argues that regulators have measures in place to address consumer fraud but said that “money laundering is in a different space.” Warren said in an interview:
The current legal structure essentially holds up a giant sign over crypto that says, money laundering done here.
Crypto Advocates Reject Warren’s Assertions
Advocates of the crypto sector have attempted to reject the Senator’s anti-money laundering bill and criticized it in the harshest terms calling it “a broad, unconstitutional threat to privacy that could sweep a range of software products beyond just finance-focused digital assets,” according to POLITICO. Various former regulators also take issue with Warren’s bill. Aside from the fact that the Treasury Department’s Financial Crimes Enforcement Network has been monitoring illicit finance in the crypto sector, specific measures are in place to prevent further unlawful financial activities within the industry. Centralized crypto exchanges registered as money transmitters are already required to verify customer identities, but the Senator’s bill would require this from more entities, including digital asset wallet providers and crypto miners. Liz Boison, a former federal prosecutor who worked at the Consumer Financial Protection Bureau when Warren launched the agency, said:
It’s so vague and broad-reaching that just understanding and implementing its ramifications could take years.
Blockchain Association CEO, Kristin Smith, commented on Warren’s attempt to stifle the industry and said lobbyists are dismissing the bill for similar reasons:
We have multiple senators who would probably filibuster something like this.
There is Widespread Support For Warren’s Approach to Cryptocurrencies
Unfortunately, Warren has received support for her position against cryptocurrencies. The concern over money laundering is something that is shared across the aisle. The fall of FTX left a bad taste for most in the industry. Paul Merski, who leads congressional relations at the Independent Community Bankers of America, commented:
It’s up to the crypto sector to prove at this point that they’re safe, secure, and superior, and I don’t think they’ve made that case.
Further, Senator Warren has managed to onboard Senator Roger Marshall to co-sponsor her bill. Marshall was outspoken about his concerns about crypto’s use in ransomware cyberattacks and drug trafficking. Sen. Marshall has said that he hopes to gain support from bankers, who themselves have to comply with illicit finance safeguards.
Whether or not Warren receives further support for her anti-crypto legislation remains to be seen. However, the concern among the crypto community remains that U.S. lawmakers have launched a targeted attack to stifle the industry, as evidenced by the SEC’s relentless pursuit of crypto-related firms since the debacle with FTX sent shockwaves through the industry.
Unfortunately, as the U.S. is the superpower it is, regulators across the world are likely to follow in its footsteps, meaning that the future is very uncertain when it comes to the digital asset industry. Investors are likely to take a more hesitant and cautious approach when choosing where to invest their wealth.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.