In an open letter addressed to the US Congress, the Blockchain Association and over 80 ex-military and security professionals including the Chief Policy Officer for Coinbase argued against the Digital Asset Anti-Money Laundering Act (DAAMLA). This act, first introduced in 2022 proposes know-your-customer (KYC) requirements for digital asset wallet providers, miners, transaction validators, and other network participants. It also—
- Requires United States persons engaged in a transaction with a value greater than $10,000 in digital assets through one or more offshore accounts to file a Report of Foreign Bank and Financial Accounts (FBAR) with the Internal Revenue Service.
- It directs the US Financial Crimes Enforcement Network (FinCEN) to issue guidance to financial institutions on mitigating the risks of handling digital assets that have been anonymized.
- It directs the US Treasury Department to establish an anti-money laundering and combating the financing of terrorism (AML/CFT) examination and review process for money service businesses and other digital asset entities.
- It directs FinCEN to ensure that digital asset ATM owners and administrators regularly submit and update the physical addresses of their ATMs and verify customer and counterparty identity.
- Proposes that banks and money service businesses should verify customer and counterparty identities on certain transactions involving unhosted crypto wallets.
The Blockchain Association argues that this act risks the US’s strategic advantage, “threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.” It explains that this proposed legislation would inadvertently hinder law enforcement activities by driving a majority of the digital asset industry overseas.
Ongoing disagreement between the association and lawmakers:
This isn’t the first time that the Blockchain Association has written to the US Congress. In November last year, the association wrote to lawmakers expressing concern that grossly overstated reports of Hamas’ use of cryptocurrency were being used to push DAAMLA. Then, in response, US Senator Elizabeth Warren (who has proposed the act) accused crypto industry groups of hiring former defense and law enforcement officials in an attempt to undermine efforts to address the alleged role of crypto in financing terrorist groups.
Global concerns around money laundering via crypto:
Just like the act proposed in the US, India has also been regulating cryptocurrency transactions through anti-money laundering laws. In December 2023, the Indian government’s Financial Intelligence Unit (FIU) wrote to the IT Ministry directing it to block the URLs of nine offshore cryptocurrency and virtual digital assets platforms for non-compliance with India’s Prevention of Money Laundering Act, 2002 (PMLA), including the likes of Binance, Kucoin, Bittrex and more.
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