Several U.S. senators have reportedly introduced a bipartisan bill that could have a major impact on anonymity within DeFi (decentralized finance) Jintuo News.
The proposed legislation, dubbed the Cryptoassets National Security Enhancement Act of 2023, aims to bring DeFi protocols under the same oversight as other U.S.-regulated financial intermediaries.
One of the main purposes of the bill is to prevent money laundering and suspicious activities, which will be done through know-your-customer (KYC) assessments. If the bill passes, operators of DeFi protocols must conduct these checks before granting users access to their platforms. Operators may also be required to report any suspicious activity and ensure that individuals sanctioned by the U.S. government cannot use their service.
The bill also extends its scope to bitcoin ATMs. Operators of these ATMs are required to verify and record customer information, including names, addresses and official documents with photos, as part of anti-money laundering efforts.
The overall goal is to combat the increase in cryptocurrency crime, prevent money laundering and evade sanctions, which are critical to national security. In the bigger picture, it speaks to the government’s attempt to wrestle with an industry that prides itself on being freewheeling and not under the control of regulators.
Critics argue that imposing such regulation could hinder the open and decentralized nature of the market, which is part of DeFi’s core appeal. The whole idea of some DeFi platforms is that they are not controlled by regulators, which they claim is a good thing. Sponsors and supporters of the bill acknowledge this but say they still deserve regulation.
The United States has been working hard to establish a comprehensive regulatory framework for digital assets. Previous bipartisan efforts to push cryptocurrency legislation have hit a snag, failing to secure full congressional approval. A previously proposed bill, the Digital Assets Anti-Money Laundering Act, seeks to limit financial institutions’ access to cryptocurrency mixing services, privacy coins, and anonymity-enhancing technologies. It failed to make progress in the Senate.
As the situation continues to evolve, striking a balance between security and innovation becomes critical. Regulating DeFi is critical to preventing illicit activity, but it must be thoughtful in order to maintain the openness and freedom of the industry.