US senator withdraws support for bill to tighten AML rules for crypto projects

What’s new? Republican Senator Roger Marshall has withdrawn his support for an anti-crypto bill he was drafting with Democratic colleague Elizabeth Warren. The Digital Asset Anti-Money Laundering Act (DAAMLA) was first introduced in December 2022, reintroduced by Warren in the Senate last December.

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What else is known? Warren noted while promoting the bill that cryptocurrencies are being used by countries under sanctions, drug dealers, and traffickers to launder billions of dollars in criminal proceeds.

The document seeks to subject the crypto industry to existing anti-money laundering and counter-terrorist financing (AML/CFT) mechanisms. According to it, even providers of decentralized non-custodial wallets, validators, and miners are obliged to comply with the Bank Secrecy Act by collecting information about customers passing data on suspicious transactions.

At the same time, decentralized software inherently cannot comply with information collection requirements as centralized institutions do, as it has no supervisory authority.

The document also proposes to oblige citizens to submit reports to the Internal Revenue Service (IRS) when conducting transactions worth more than $10 000 through offshore institutions.

Analysts previously noted that the adoption of this bill would actually declare cryptocurrency illegal. In addition, some industry participants believe that officials are greatly exaggerating the role of cryptocurrencies in financing illegal activities.

On February 13, a group of 80 former military and national security officials published an open letter warning lawmakers against supporting DAAMLA. It notes that the legislation would hinder enforcement and increase national security concerns by pushing much of the digital asset industry overseas.

On February 20, advocacy group Chamber of Digital Commerce urged the Senate Banking Committee not to consider DAAMLA because it would “erase hundreds of billions of dollars in value for US startups and decimate the savings of countless Americans” who have invested in cryptocurrency legally.

After Marshall withdrew from the initiative, the bill still had 18 supporters in the Senate.

Warren, known for her extremely negative attitude towards the crypto industry, plans to run for re-election as a senator from Massachusetts this year. Lawyer John Deaton, who acted as an attorney for fintech company Ripple in a case against the US Securities and Exchange Commission (SEC), announced his intention to run for the Republican Party in the same state and take Warren’s seat in the Senate.

Donald Trump, as the Republican presidential candidate, has been vocal in his support for the crypto industry, speaking of the need to make the United States a global crypto hub. His pledge to support the mining industry if he wins last month caused the stock price of industry companies to spike.