Republican Senator Roger Marshall has withdrawn his support for the Digital Asset Anti-Money Laundering Act of 2023, a bill he initially co-sponsored. This marks a significant development in the ongoing debate over cryptocurrency regulation in the U.S.
Background on the Bill
- Reintroduction: The bill was reintroduced in the Senate on July 27, 2023, by Senator Elizabeth Warren and others, with Marshall as a co-sponsor.
- Bipartisan Support: It garnered support from 18 co-sponsors across party lines.
- Objectives: The bill aims to bring the crypto industry into greater compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) frameworks.
Marshall's Involvement and Withdrawal
- Initial Stance: Marshall was a vocal critic of crypto, calling it a “threat to national security,” especially targeting stablecoin issuer Tether.
- Recent Actions: In April, Marshall and Warren sent a letter to the Department of Defense expressing concerns over Tether’s role in circumventing U.S. sanctions.
- Withdrawal: Marshall’s office has not provided a reason for his withdrawal from the bill, and has yet to return a request for comment.
Bill Provisions
- Classification of Digital Asset Providers: It classifies unhosted wallet providers, miners, and validators as financial institutions subject to Bank Secrecy Act compliance.
- Regulations by Financial Crimes Enforcement Network (FinCEN): The bill mandates FinCEN to issue regulations for reporting requirements for significant foreign digital asset holdings.
- Compliance Measures: It seeks to establish compliance measures for financial institutions to mitigate risks associated with anonymity-enhancing technologies.
Political Context and Reactions
- Crypto as a Political Issue: Crypto regulation has become a contentious political issue, with former President Donald Trump promising to relax regulations if re-elected, while President Joe Biden’s administration faces criticism for a stringent regulatory approach led by SEC Chairman Gary Gensler.
- Criticism of the Bill: Critics argue the bill imposes impractical compliance burdens, stifles innovation, and could push activities offshore. They also raise privacy concerns and highlight potential economic impacts and unintended consequences, such as driving users to unregulated platforms, thereby undermining the bill's intent to bolster security.
Marshall's withdrawal from the bill signals potential challenges in achieving a consensus on crypto regulation in the U.S., reflecting broader political divisions and varying perspectives on how to balance innovation with security and compliance.
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