Senator Warren’s bill ‘threatens tens of thousands of US jobs’ — Blockchain Association

The Blockchain Association has sent a second letter expressing its concerns over Senator Elizabeth Warren’s proposed Digital Asset Anti-Money Laundering Act of 2023 (DAAMLA).

The letter, signed by 80 former national security and intelligence officials, argues that Warren’s bill “risks our nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.”

This new letter forms a response to Sen. Warren’s criticism of the initial letter sent to her office in November 15, 2023. The Blockchain Association claims that Sen. Warren questioned the “motivations and integrity of scores of [U.S.] military and intelligence veterans without addressing” the substance of the arguments laid out for her consideration.

An industry trade group advocating for the crypto industry in Washington, the Blockchain Association’s members include Coinbase, a16zcrypto, dYdX, Chainalysis, Consensys, EigenLayer, Optimism, Polygon Labs, 0x Labs, Ripple, Solana Foundation, Uniswap, and Digital Currency Group, among other major crypto and venture capital firms in the industry.

Sen. Warren’s DAAMLA was introduced in the US Senate on December 15, 2022. The bill is stipulates an enhanced framework for regulation the use of digital assets, particularly cryptocurrencies, to prevent money laundering, terrorist financing, and other illicit activities. The bill also proposes extending provisions in the Bank Secrecy Act (BSA) to require new transparency responsibilities from digital asset providers and operators.

The controversial sections of the bill prohibit the use of certain anonymity-enhancing technologies (such as forks or iterations of Tornado Cash), and strengthen enforcement of anti-money laundering (AML) and countering the financing of terrorism (CFT) compliance. The bill also addresses the regulation of unhosted digital wallets, digital asset ATMs, and the reporting and auditing process for foreign digital asset accounts.

In general, the bill would require all cryptocurrency miners and blockchain validators to conduct strict Know-Your-Customer (KYC) and anti-money laundering checks, which the industry argues is unworkable given how the cryptographic processes work. The legislation has 19 Senate co-sponsors so far, but has not received backing from Senate Banking Committee Chair Sherrod Brown yet. Brown holds the decision with regards to the type of crypto legislation (if any) may proceed from his committee to the full Senate for review and consideration.

The latest letter from the Blockchain Association urges lawmakers to consider the implications of imposing regulations that could threaten jobs and reduce the strategic advantage of the US economy over crypto as a rapidly growing global industry.

While momentum builds behind lawmakers like Sen. Warren who want to curb illicit cryptocurrency transactions, bills aimed at heavily regulating the industry face opposition from trade groups who argue they could undermine innovation.