As federal prosecutors seek to imprison former crypto darling Sam Bankman-Fried, Sen. Elizabeth Warren is attempting to push through Congress a bipartisan crackdown on money laundering in the crypto industry.
The Massachusetts Democrat is teaming up with Republican Sen. Roger Marshall of Kansas to introduce new legislation on Wednesday that would seek to close loopholes in the financial system that pose national security risks by allowing digital assets to be used for money laundering.
Due to time constraints, the Warren-Marshall crypto legislation has little chance of getting through this Congress. The bill would need to be reintroduced when the new Congress is seated.
Alluding to the FTX scandal, Warren said the bankruptcy of a major crypto platform and criminal prosecution of its former CEO means that digital assets are under serious scrutiny across the political spectrum.
The push from Warren and Marshall comes just a day after Bankman-Fried, the former CEO of crypto exchange FTX, was indicted for money laundering and multiple other federal offenses. Prosecutors allege Bankman-Fried engaged in a global scheme to deceive and defraud customers, investors, lenders, and the campaign finance system
The new bill, called the Digital Asset Anti-Money Laundering Act, would attack money laundering by attempting to bring the digital asset ecosystem into compliance with the existing system of anti-money laundering in the worldwide financial system.
The legislation comes as Warren and other lawmakers are scheduled to hold a hearing on Wednesday about the crypto crash and the harm to consumers.
The bill would also force regulators to push ahead with new restrictions aimed at closing a gap for digital wallets that lets people bypass anti-money laundering and sanctions checks.
Specifically, it would direct FinCEN to finalize and implement a rule proposed in 2020 that would require banks and money service businesses to verify customer and counterparty identifies, keep records, and file reports linked to unhosted wallets or ones in jurisdictions that are not compliant with the Bank Secrecy Act.
The stunning revelations in the Bankman-Fried charges underscore how crypto remains the wild west of the financial world. But it’s not clear whether the FTX scandal will be enough to prompt Congress to take major action.
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