Sen. Elizabeth Warren, along with other Democrats, criticized the alleged use of crypto in illicit finance and scams during a Senate Banking Committee hearing on Thursday.
Warren, who has been critical of crypto, has been pushing to advance her Digital Asset Anti-Money Laundering Act over the past year and has gained support from 19 other senators, including Sen. Lindsey Graham, R-S.C.
“This bill would plug the holes in our anti-money laundering rules to make it easier for financial regulators to track suspicious crypto activity to make it more visible and to shut down the scammers,” Warren said during a Senate Banking Committee hearing on Thursday to discuss fraud and scams in the banking system.
Warren’s bill aims to extend Bank Secrecy Act requirements, including know-your-customer rules, to miners, validators and wallet providers. The bill has been met with pushback from some in the crypto industry who say it is unconstitutional and too wide-reaching.
Senate Banking Committee Chair Sen. Sherrod Brown, D-Ohio, also voiced concerns about crypto and its use in scams during Thursday’s hearing.
“As we’ve seen in other hearings in the last three years, frauds and scams are not unique in consumer finance, they are also common within cryptocurrency,” Brown said. “We will keep pushing to make our financial system safer – whether it’s stopping rampant frauds and scams in cryptocurrency or in apps and check fraud.”
Brown, who would be instrumental in advancing crypto bills, has recently said he is in talks about a bill that would target the use of digital assets for money laundering, according to Politico.
Other lawmakers are also working on crypto related bills, including one led by House Republicans that takes a comprehensive approach to crypto’s market structure. Rep. French Hill, R-Ark., told reporters on Monday that that bill would include an AML provision.
Warren also slammed stablecoins during Thursday’s hearing, stating that new data showed that stablecoins are used in the majority of illicit crypto transactions.
Stablecoins now account for the majority of all illicit transaction volume, according to a January report from blockchain analytics firm Chainalysis.
“This change also comes alongside recent growth in stablecoins’ share of all crypto activity overall, including legitimate activity. However, stablecoin dominance isn’t the case for all forms of cryptocurrency-based crime,” according to that report.
Illicit finance in crypto has also caught the attention from the Biden Administration. Deputy Treasury Secretary Wally Adeyemo called on Congress late last year to give it more authority to go after illicit actors in the digital asset industry. Adeyemo specifically said that “dollar-backed stablecoin providers” that are outside the U.S. should not be able to use U.S. currency without putting in place procedures to block terrorists from taking advantage of their platform.
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