U.S. Senate Proposes Digital Asset Anti-Money Laundering Act: Protecting Consumers at Risk

• The U.S. Senate has proposed the Digital Asset Anti-Money Laundering Act Of 2022, that is deeply concerning to international human rights, unconstitutional and in direct opposition to current U.S. consumer privacy regulations.
• The Act proposes the classification of custodial wallets and “unhosted wallet providers” as money service businesses, and prohibits financial institutions from handling, using or transacting with digital asset mixers, privacy coins and other anonymity-enhancing technologies.
• The enactment of section three, part a would infringe on the First Amendment by requiring anyone writing software which enabled the sending, receiving and signing of bitcoin transactions to obtain a money transmitter license.

The U.S. Senate recently proposed the Digital Asset Anti-Money Laundering Act Of 2022, a bill that has raised serious concerns among human rights advocates, privacy and security experts, and cryptocurrency users around the world. The Act proposes a number of regulations that are not only deeply concerning to international human rights, but unconstitutional and in direct opposition to the current U.S. consumer privacy regulations.

Section three, part a of the Act seeks to classify custodial wallets and “unhosted wallet providers”, likely meaning developers of non-custodial wallets, as money service businesses. This would require anyone writing software which enabled the sending, receiving and signing of bitcoin transactions to obtain a money transmitter license, thus infringing on the First Amendment. Furthermore, section three, part d of the Act proposes the promulgation of a rule that prohibits financial institutions from handling, using or transacting with digital asset mixers, privacy coins and other anonymity-enhancing technologies, as specified by the secretary of the U.S. Treasury.

These rules would impede innovation in the cryptocurrency industry, hampering its growth and adoption, while also threatening the privacy and security of blockchain users. The Digital Asset Anti-Money Laundering Act Of 2022 would put U.S. citizens at risk of financial surveillance and make them vulnerable to malicious actors. It would also make the cryptocurrency industry less competitive, as compliance costs would be too high for many startups to bear.

In order to protect consumers, privacy and security experts have called on the U.S. Senate to reject this bill and instead pass legislation that is both constitutional and in line with the current U.S. consumer privacy regulations. Furthermore, they have urged the U.S. government to work with the cryptocurrency industry to create regulations that are fair and balanced, and that foster innovation and growth in the sector.

The Digital Asset Anti-Money Laundering Act Of 2022 poses a serious threat to the privacy and security of U.S. citizens and the cryptocurrency industry. It is essential that the U.S. Senate reject this bill and instead pass legislation that is both constitutional and in line with the current U.S. consumer privacy regulations, so as to ensure the safety of U.S. citizens and the continued growth and innovation of the cryptocurrency industry.