Congressman Hill Critiques Warren's Crypto Bill, Raises Questions About Regulating Miners, Validators
Summary:
Congressman French Hill has questioned a portion of Senator Elizabeth Warren's proposed Digital Asset Anti-Money Laundering Act, which suggests extending financial institution regulations to digital asset miners and validators. Hill argues that such changes would not effectively prevent terrorist organizations' use of cryptocurrencies. The majority of illicit crypto financing occurs through centralized exchanges, according to Arktouros co-founder Michael Mosier. The debate comes amidst growing concern about the use of cryptocurrencies for financing terrorism, with many in US government supporting Warren's bill.
US Congressman French Hill, head of the House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion, has taken issue with a portion of Senator Elizabeth Warren's proposed digital assets legislation. In a hearing titled "Crypto Crime in Context" held on February 15, Hill and his fellow lawmakers sought insights from cryptocurrency professionals about the idea of subjecting digital asset miners and validators to comparable regulations that are in place for financial institutions. Senator Warren's proposed Digital Asset Anti-Money Laundering Act suggests adjustments to the Bank Secrecy Act to impose new guidelines on crypto service providers in order to deter the funding of terrorist groups.
Hill inferred that altering the conditions for miners and validators wouldn't aid in thwarting the use of cryptocurrencies by terrorist groups. Nonetheless, he didn't directly refer to the bill proposed by the senator from Massachusetts. Arktouros co-founder, Michael Mosier, who was also an acting director for the Financial Crimes Enforcement Network, asserted that the lion's share of illicit financing in digital assets happens via centralized exchanges.
Miners and validators, Mosier explained, predominantly create and authenticate blocks, operating in a manner akin to an internet service provider. "Such an operation would not generally be subject to Know Your Customer rules as it's just data processing," he clarified. He further stated, "Miners or validators don't have customers, they merely process computations mathematically. The blocks they create or verify are random; they don't have the ability to choose them."
The hearing attested to the committee's persistent efforts to address illegal activities involving cryptocurrencies, particularly those funding terrorism. This was the panel's second such meeting in the recent four months. Meanwhile, the committee's chair, Representative Patrick McHenry, announced his decision not to seek re-election in 2024, the leadership of the committee may thus swing either way, Democrat or Republican, in line with the election results.
In the wake of the October 7 attack on Israel by Hamas, the role of cryptocurrencies in financing terrorism has sparked a growing clamor for action within the US government, with many throwing their weight behind Senator Warren's proposed legislation. On February 15, Chainalysis reported a more than 29% decline in the volume of crypto transactions tied to unauthorized activities between 2022 and 2023, a drop from $31.5 billion to $22.2 billion. The rise in proposed crypto regulations in the US, according to some analysts, stems from lawmakers' unease and skepticism.
Published At
2/16/2024 12:59:22 AM
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