Warren pushes bipartisan bill to regulate crypto firms after FTX collapse
Move co-sponsored by Republican Roger Marshall aims to crack down on money laundering after arrest of Sam Bankman-Fried
Elizabeth Warren is pressing Congress to adopt new bipartisan legislation which would force crypto firms to abide by the same regulations as banks and corporations in an attempt to crack down on money laundering through digital assets.
The Democratic US senator from Massachusetts is pushing for the new controls on the crypto industry in the wake of the spectacular collapse of the cryptocurrency exchange FTX. On Tuesday its founder and former CEO Sam Bankman-Fried was charged with eight criminal counts including conspiracy to commit money laundering.
Warren’s bill is being co-sponsored by the Republican senator from Kansas Roger Marshall. The Digital Asset Anti-Money Laundering Act would essentially subject the world of crypto to the same global financial regulations to which more conventional money markets must conform.
Under current systems, crypto exchanges are able to skirt around restrictions designed to stop money laundering and impose sanctions. Should the bill be enacted into law it would authorize the Financial Crimes Enforcement Network (FinCen) to reclassify crypto entities as “money service businesses” which would bring them under basic regulations laid out in the Bank Secrecy Act.
In a statement to CNN, Warren said that the “commonsense crypto legislation” would protect US national security. “I’ve been ringing the alarm bell in the Senate on the dangers of these digital asset loopholes,” she said, adding that crypto was “under serious scrutiny across the political spectrum”.
Bankman-Fried, 30, was indicted by prosecutors at the southern district of New York and is being held in custody in the Bahamas. The US Securities and Exchange commission (SEC) has also brought civil charges against him, accusing him of creating a firm that was a “house of cards”.
An ongoing area of interest to investigators was the vast political contributions made by Bankman-Fried to the Democratic party, as well as to Republicans in the form, he has said, of secretive dark money donations. The Wall Street Journal has calculated that he gave more than $95,000 in direct campaign donations to the same members of the US House financial services committee who are now investigating him.
Even before the implosion of FTX, the treasury department was focusing on the feared risks to national security posed by relatively unregulated digital currency exchanges. In August it moved against Tornado Cash, a virtual currency mixer which it accused of laundering more than $7bn in virtual currency since 2019.
The Treasury said that Tornado Cash was attractive to launderers of the proceeds of cybercrime, including the Lazarus Group, a hacking group sponsored by North Korea. The entity’s appeal to cybercriminals was that it could move digital assets around anonymously, obscuring the origin and destination of transactions and hiding the parties involved.
Warren is a former Harvard law professor and expert on consumer protection and economic inequality. She entered the Senate in 2013, where she established herself as a leading progressive critic of corporate largesse and a spirited opponent of Donald Trump.
She made an unsuccessful bid for the White House in 2020.