DeFi Will Have to Crack Down on Money Laundering Under New Bipartisan Bill

US lawmakers of both parties are fed up with terrorists and criminals using decentralized finance (DeFi) platforms to launder money. If a new bill becomes law, DeFi will have to start taking money laundering seriously, with the biggest investors in its protocols facing prosecution for any offenses.

The broader crypto ecosystem has had to comply with stringent anti-money laundering (AML) requirements in recent years. With criminals looking for ever-easier ways to clean their dirty cash, crypto has seen an influx of money with suspect origins. One sector of Web3 to escape without much scrutiny, so far, has been DeFi. But no longer.

DeFi Will Have to Start Behaving Like Financial Firms

The new bipartisan bill, S.2355, is called the Crypto-Asset National Security Enhancement Act of 2023. Senator Jack Reed (D-RI), a member of the Senate Banking Committee, introduced the bill on Tuesday. Co-sponsors include Senators Mike Rounds (R-SD), Mitt Romney (R-UT), and Mark Warner (D-VA).

The bill’s aims are blunt. It seeks “to clarify the applicability of sanctions and antimoney laundering compliance obligations to United States persons in the decentralized finance technology sector and virtual currency kiosk operations.”

As a result of the bill, DeFi entities in the United States will no longer be able to plead ignorance if suspected violations arise. The legislation lays down strict rules about compliance with anti-money laundering (AML) laws. If no one owns a DeFi operation, then anyone who invests more than $25 million in it will be on the hook for any violations.

As a release from Senator Warner’s office put it, the bill will force DeFi firms and individuals to meet the same requirements as centralized exchanges, casinos, and pawn shops. It also sets out to “modernize” the Treasury Department’s AML resources and functions.

S.2355 will compel DeFi protocols to scrutinize and report on their operations more carefully. A

Go to Source to See Full Article
Author: Josh Adams

Did you like this?
Tip BTC Newswire with Cryptocurrency