The Bank Policy Institute (BPI), a body that represents the banking sector in the US, has officially endorsed Senator Elizabeth Warren’s drive to enforce stricter regulations on cryptocurrencies.
Warren, in collaboration with three other senators, has recently re-proposed the Digital Asset Anti-Money Laundering Act. This act is designed to impose more rigorous regulations to prevent money laundering and financing of terrorism within the crypto sector.
Surprisingly, the BPI, which usually faces criticism from Warren, has publicly shown its support for this bipartisan bill, as indicated by a Bloomberg report on Friday.
BPI declared in a statement that “The current anti-money laundering and Bank Secrecy Act framework needs to include digital assets. We anticipate active participation in this process to protect our nation’s financial system from all forms of illicit financing.”
If the proposed seven-page bill is approved, it will mandate digital asset wallet providers, miners, and other blockchain validators to keep customer identity records.
Moreover, it would bar financial institutions from using digital asset mixers intended to disguise blockchain data, such as Tornado Cash.
The reintroduction of this bill was announced on Friday by Warren, Democrat Joe Manchin from West Virginia, and Republicans Roger Marshall from Kansas and Lindsey Graham from South Carolina.
Beyond tracking customer identities, the proposed law would also encourage the Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission to develop new examination procedures to ensure adherence to anti-money laundering (AML) and terrorism financing stipulations.
The Massachusetts Bankers Association, AARP, the National Consumer Law Center, and the National Consumers League are among other organizations expressing support for this bill.
Crypto Veterans Hit Out at New Legislation
However, there is no consensus in the crypto community regarding Warren’s proposed bill.
Tyler Winklevoss, co-founder of the Gemini crypto exchange, lambasted the legislation in a tweet on July 28, implying that those resisting Warren’s bill are on the right track.
Warren first proposed the bill to the US Senate in December 2022, asserting that existing AML laws do not sufficiently address the crypto sector.
During a Senate Banking Committee hearing titled “Crypto Crash: Why the FTX Bubble Burst and the Harm to Consumers” on February 14, Warren advocated for treating cryptocurrencies with the same regulatory measures as traditional banking institutions.
She argued against any exclusions for decentralized entities operating based on code, claiming that such exceptions could pave the way for money laundering by individuals engaged in illegal activities.
Apart from Warren, Gary Gensler, the Chairman of the US Securities and Exchange Commission (SEC), has also been openly critical of the cryptocurrency market.
In a recent interview, Gensler expressed his apprehension regarding the widespread fraud in the cryptocurrency industry, stating that the number of malpractices is alarmingly high.
He cautioned cryptocurrency investors against assuming they are protected under securities laws, even though these laws are applicable to many cryptocurrencies.
Gensler remarked, “US investors are not receiving complete, fair, and accurate disclosures. The platforms and intermediaries are engaging in practices that we would never condone or expect from traditional exchanges like the New York Stock Exchange or Nasdaq.”