United States Representative French Hill, who chairs the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, has raised concerns about a certain aspect of Senator Elizabeth Warren’s proposed bill regarding digital assets.
During a hearing on February 15, which was focused on “Crypto Crime in Context,” Hill and other lawmakers questioned experts from the cryptocurrency industry about the possibility of subjecting digital asset miners and validators to the same regulations currently applied to financial institutions. Senator Warren’s bill, known as the Digital Asset Anti-Money Laundering Act, aims to amend the Bank Secrecy Act in order to introduce new standards for crypto providers, with the goal of combating the financing of terrorist organizations.
Representative Hill suggested that altering the requirements for miners and validators would have little effect on preventing terrorist organizations from using crypto. However, he did not explicitly mention Senator Warren’s bill. Michael Mosier, co-founder of Arktouros and former acting director for the Financial Crimes Enforcement Network, supported Hill’s view and stated that the majority of illicit financing in the crypto industry occurs through centralized exchanges.
Mosier explained that miners and validators essentially generate and verify blocks in a manner similar to an internet service provider. Therefore, subjecting them to Know Your Customer regulations would not be appropriate since they are only processing data.
This hearing was the second held by the House committee in the last four months that focused on the illicit uses of cryptocurrency, particularly the financing of terrorism. Representative Patrick McHenry, who chairs the full committee, announced in December that he will not seek re-election in 2024, potentially leaving the committee leadership in the hands of either Democrats or Republicans depending on the election outcome.
In light of the October 7 attack by Hamas on Israel, there has been an increasing call for action in the US government to address the issue of crypto-financed terrorism. Many individuals support Senator Warren’s proposed bill. According to Chainalysis, the volume of cryptocurrency transactions associated with illicit activities decreased by over 29% from 2022 to 2023, dropping from $31.5 billion to $22.2 billion.
The proposed crypto regulations in the United States are driven by lawmakers’ concerns and uncertainties surrounding the industry.