In July 2023, a bipartisan group of U.S. senators led by Sen. Elizabeth Warren reintroduced the Digital Asset Anti-Money Laundering Act, a legislative proposal aimed at extending AML obligations to a broader spectrum of the crypto ecosystem. The bill seeks to expand the definition of financial institutions to include decentralized finance (DeFi) platforms, crypto wallet providers, miners, and validators—parties previously seen as outside traditional regulatory reach.

The act proposes mandatory registration for crypto actors, customer identification protocols, and compliance with sanctions laws, including the requirement to report suspicious activities. It also seeks to eliminate the anonymity offered by privacy coins and mixers by requiring these technologies to incorporate traceability mechanisms.

Critics argue that the bill could stifle innovation by imposing traditional compliance burdens on open-source developers and decentralized communities. Supporters contend it is a necessary step to combat money laundering, terrorism financing, and sanctions evasion in the crypto space.

For compliance professionals, this legislation—if passed—would dramatically expand their oversight responsibilities. Organizations involved in the crypto ecosystem should begin evaluating their exposure to decentralized functions and prepare to integrate AML procedures into their smart contract architectures. The message is clear: compliance expectations are expanding into every corner of the digital asset universe, and early preparation is crucial.

Source: S.2669 – Digital Asset Anti-Money Laundering Act of 2023. 118th Congress (2023-2024)
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