US Senator Elizabeth Warren said any new crypto regulation, including the newly proposed regulatory framework for the stablecoin market, must include the full suite of anti-money laundering authorities that the Treasury Department requested in November 2023.
In an April 16 letter addressed to US Treasury Secretary Janet Yellen, Senator Warren articulated her stance and advocated for the extension of Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) obligations to cover miners, validators, and DeFi intermediaries alongside stablecoin issuers.
Warren’s argument
According to her, any regulatory frameworks for stablecoins would fold the sector “deeper into the banking system [and] will supercharge trading in the crypto market, exploding the opportunities for terrorists and other bad actors to exploit those financing channels to both evade sanctions and receive a limitless stream of untraceable income.”
Senator Warren further emphasized cryptocurrencies’ perceived national security threats, citing Treasury Deputy Secretary Adewale Adeyemo‘s recent testimony before Congress.
She highlighted instances where terrorist entities like Hamas reportedly exploit blockchain technologies for their fundraising and claimed that the heavily sanctioned country Iran, for instance, derives substantial revenue from validating blockchain transactions and mining Bitcoin.
Consequently, she argued that “excluding miners, validators, and other intermediary nodes in the DeFi system from the stablecoin legislation’s AML/CFT requirements would allow bad actors to profit from the increase in crypto trading that stablecoin legislation would provide.”
Warren added:
“Any legislation that enhances the attractiveness of crypto to ordinary crypto traders will multiply money-making opportunities for sanctioned entities like Iran and the criminal underground.”
Crypto community reacts
Warren’s latest missive at the emerging industry has drawn several reactions from crypto stakeholders.
Custodia Bank CEO and founder Caitlin Long said Warren’s letter completely missed the risk to the banking system and urged the lawmaker to “consider consulting someone who actually de-risked a large bank, instead of blindly spewing talking points.”
Similarly, a pro-crypto candidate gunning for Warren’s Senate seat, John Deaton, opined that the letter further shows that she “is working hard on behalf of the banking industry.”
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