Digital Asset Anti-Money Laundering Act 2023 | Coin Informer Guide

February 20, 2024. The Chamber of Digital Commerce (CDC) accused Senator Elizabeth Warren and Sherrod Brown of trying to undermine the crypto industry through the Digital Asset Anti-Money Laundering Act of 2023. The CDC's latest post on X has brought renewed attention to this controversial act. This article provides an overview of the act and its potential impact on the digital assets industry.

TL;DR

The Digital Asset Anti-Money Laundering Act of 2023 has been reintroduced, raising concerns from the CDC about its implications for the crypto industry. The act aims to impose stricter regulations on digital assets.

Key Takeaways

The Digital Asset Anti-Money Laundering Act was first introduced in December 2022 and reintroduced in July 2023.
The act aims to close regulatory gaps and establish a framework for governing digital assets.
Key provisions include extending Bank Secrecy Act responsibilities and imposing KYC requirements.
The CDC claims the act could severely harm the crypto industry and American investors.
The Senate Banking Committee is set to reconsider the bill, with potential hearings expected soon.

An Overview of the Digital Asset Anti-Money Laundering Act of 2023

A Little Background of this Act

The Digital Asset Anti-Money Laundering Act was first introduced in the US Senate by Elizabeth Warren and Roger Marshall in December 2022. After delays, it was reintroduced on July 27, 2023, with additional cosponsors Joe Manchin and Lindsey Graham.

What Led to the Proposition of this Act in the Senate?

The act was proposed in response to warnings from the Treasury Department, the Department of Justice, and the Federal Bureau of Investigation regarding the use of digital assets in money laundering and other crimes. In 2023 alone, criminals in countries like Iran, Russia, and North Korea stole over $1.7 billion in digital assets. Reports indicated that around $20 million in digital assets were involved in illicit activities in 2022.

What does the Digital Asset Anti-Money Laundering Act of 2023 Say?

The main goal of the Digital Asset Anti-Money Laundering Act of 2023 is to address regulatory gaps and create a framework for governing digital assets. Key provisions include:

1. Extension of Bank Secrecy Act (BSA) Responsibilities

The act proposes extending BSA requirements to all individuals involved in digital asset transactions, including providers, validators, and miners, who would need to comply with KYC requirements.

2. Security on Unhosted Wallets

The act supports FinCEN in proposing rules for banks and MSBs to verify customer identities and file reports on transactions involving unhosted wallets.

3. Guidance on Digital Assets Handling

FinCEN would provide guidance to financial institutions on handling digital assets and transactions involving anonymity-enhancing technologies.

4. Review Process of Digital Asset Entities

The act would empower the Department of Treasury to conduct AML/CFT examinations of digital asset entities, with assistance from the SEC and CFTC.

5. Restrictions on Payments to Foreign Bank Accounts

US citizens transacting over $10,000 in digital assets through offshore accounts would need to file an FBAR report with the IRS.

6. Update of Physical Addresses of Digital Asset ATM Owners

The act would require digital asset ATM owners to submit their physical addresses along with KYC information.

What Claims Did the Chamber of Digital Commerce (CDC) Make on Senators Warren & Brown?

On February 20, 2024, the CDC claimed on X that Senators Warren and Brown were attempting to undermine the entire crypto industry through the Digital Asset Anti-Money Laundering Act. Perianne Boring, the CDC's Founder and CEO, expressed concerns in a letter to Senator Brown, stating that the bill could erase significant value for US start-ups and harm American investors.

What’s Next?

The Senate Banking Committee is preparing to reconsider the bill, with potential hearings expected in the coming months. The passage of the Digital Asset Anti-Money Laundering Act of 2023 could significantly impact the digital assets industry. Additionally, both Senators Warren and Brown are running for reelection in 2024, which may influence the political landscape surrounding this act.