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Warren’s Crypto Bill: Unlikely to Pass, Here’s Why

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Elizabeth Warren, a prominent Democratic lawmaker, has proposed the Digital Asset Anti-Money Laundering Act, which aims to crack down on the alleged illicit use of cryptocurrencies. However, the bill faces significant challenges due to its potential unconstitutionality and the political landscape. This blog post explores the implications of the bill and why it is unlikely to pass.

The Unconstitutional Nature of Warren’s Bill

Warren’s bill, as currently drafted, raises concerns about its constitutionality. Critics, including industry lobbyists at Coin Center, argue that the bill could violate constitutional rights. The legislation’s broad reach and restrictions on privacy guarantees associated with cryptocurrencies may face legal challenges if enacted.

While Warren’s bill has gained support from five Democratic lawmakers, its passage through Congress remains uncertain. The U.S. governance system often faces hurdles due to partisan politics, infighting, and gridlock. Consequently, the bill’s chances of approval are diminished, which may be beneficial for both the crypto industry and the American public.

Focus on Surveillance Instead of Comprehensive Reforms

Warren’s bill has drawn criticism for its narrow focus on surveillance rather than addressing comprehensive regulatory reforms within the blockchain industry. Following recent events involving FTX, U.S. legislators are prioritizing more substantial crypto regulatory reforms. Warren’s bill fails to address the critical issues within the blockchain space, making it a questionable use of time and resources.

Warren’s Digital Asset Anti-Money Laundering Act shares similarities with another congressional proposal seeking to expand surveillance measures over digital technologies. The FISA Reform and Reauthorization Act of 2023 aims to broaden surveillance capabilities within the United States. Both bills raise concerns about the potential infringement on individual privacy rights and the expansion of government surveillance.

Expanding the Definition of “Providers”

The proposed reform bill, intended to reauthorize Section 702 of the Foreign Intelligence Surveillance Act (FISA), seeks to expand the definition of “electronic service communications provider.” This change would allow law enforcement and intelligence agencies to gather more information from various service providers, including phone, email, and text messaging records. The bill effectively turns these providers into “surrogate spies,” compromising individual privacy.

Overreach in Crypto Reporting Requirements

Warren’s bill aims to increase reporting requirements for all sectors of the cryptocurrency industry, including centralized exchanges, node operators, and software developers. However, the effectiveness and constitutionality of expanding the Bank Secrecy Act (BSA) have been questioned. Critics argue that Suspicious Activity Reports (SARs) do not prevent crime but merely limit banks’ liability.

Intent and Political Motivations

Warren’s approach to cryptocurrency regulation has been interpreted by some as an attempt to associate the industry with criminal activity while reinforcing her image as tough on crime. Although her proposals may not always succeed, they contribute to shaping the political discourse around cryptocurrencies and potentially influence future regulatory efforts.

Conclusion

Elizabeth Warren’s Digital Asset Anti-Money Laundering Act faces significant obstacles due to its potential unconstitutionality and the political landscape surrounding cryptocurrency regulation. The bill’s focus on surveillance and its narrow scope have drawn criticism from industry experts. While the need for regulatory reforms remains, it is crucial to strike a balance that protects individual privacy and fosters innovation within the cryptocurrency industry.

By focusing on comprehensive and thoughtful regulatory measures, policymakers can ensure that cryptocurrencies flourish while addressing concerns related to illicit activities. As the debate surrounding crypto regulation continues, it is essential to consider the long-term implications and strike a balance that benefits both the industry and the public.

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