US new bills could make DeFi protocol investors responsible, aim to fight crypto-facilitated crime

Senators Warren, Marshall, Lummis and Gillibrand introduce a bipartisan bill amendment increasing regulation of cryptocurrencies.
A further bill titled the Crypto-Asset National Security Enhancement Act of 2023 is focused on changing the regulatory landscape of the DeFi market.
Nasdaq is set to cancel its plans of launching a crypto custody service, citing (uncertain) US regulatory conditions.

The US Senate has been busy preparing legislation to increase regulatory scrutiny of crypto providers. This includes an amendment to a new bill set to go before the Senate with a focus on Anti-Money Laundering (AML) and a bill that imposes the same regulatory demands on DeFi as those faced by mainstream financial institutions, including DeFi investors of over $25 million US Dollars being saddled with new obligations and responsibilities.

Anti-Money Laundering Amendment to go before Senate

The first piece of regulation, S.Amdt.712 to the National Defense Authorization Act for Fiscal Year 2024, increases Anti-Money Laundering regulations on crypto service providers. The bipartisan amendment was introduced by Senators Warren, Marshall, Lummis and Gillibrand. The first two have been critical of crypto, while the other two have been avid crypto supporters.

The amendment focuses on different aspects of improving security and requires the development of a new process by the US Treasury, SEC, CFTC, and FinCEN, among others.

Over the next two years, the aim is to introduce new powers to ensure that crypto protocols and service providers’ AML programs are robust. It further requires FinCEN to submit a report in a year on the operations of crypto-asset mixers and tumblers.

New bill to oversee DeFi

On Tuesday, Senators introduced another piece of crypto regulation, a crypto-related bill entitled Crypto-Asset National Security Enhancement and Enforcement Act of 2023 (CANSEE). Senators Jack Reed, Mike Rounds, Mark Warner and Mitt Romney put forward the bill, which requires Decentralized Finance (DeFi) services to meet the same AML and economic sanctions compliance obligations as other financial companies.

As per Senator Warner, The CANSEE Act would end special treatment for DeFi by applying the same national security laws that apply to banks. The press release also noted,

“If nobody controls a DeFi service, then—as a backstop—anyone who invests more than $25 million in developing the project will be responsible for these obligations.

In line with the same, Senator Reed stated,

“This legislation bolsters the Treasury Department’s tools to protect our national and economic security…Our bill will also ensure that law enforcement has access to better information about cryptocurrency transactions, which they need to fight crimes like cross-border drug trafficking, weapons proliferation, and ransomware attacks.

Effects of regulatory uncertainty

Recent crackdowns by the SEC have led companies to undertake self-assessment before planning to adopt crypto. The foremost example of this is Nasdaq which was set to launch its crypto custody services in Q2 this year.

However, following the recent SEC and Gary Gensler spectacle, Nasdaq announced that it would be dropping its plans. The announcement was made by CEO Adena Friedman in an earnings call on July 19.

Like this article? Help us with some feedback by answering this survey:

Share: Cryptos feed

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Join Telegram