Senator Elizabeth Warren has urged the US Treasury Department to extend anti-money laundering (AML) and Combating the Financing of Terrorism (CFT) obligations to cryptocurrency miners, validators, and decentralized finance (DeFi) intermediaries. In a letter to Treasury Secretary Janet Yellen, Senator Warren argued that the proposed regulatory framework for stablecoins could increase illegal activities if these entities are not subjected to AML/CFT requirements.

Warren's Concerns

Warren expressed concerns about sanctioned countries like Iran using blockchain transactions and Bitcoin mining to generate substantial revenue. She believes that any regulation of stablecoins will expand the crypto market and provide more opportunities for terrorists and criminals to exploit these channels. She referenced Treasury Deputy Secretary Adewale Adeyemo's testimony on the potential national security threats posed by cryptocurrencies.

Warren highlighted instances of terrorist organizations like Hamas exploiting blockchain technologies for fundraising and claimed that heavily sanctioned countries like Iran derive significant revenue from validating blockchain transactions and mining Bitcoin. She argued that excluding miners, validators, and other intermediaries from the stablecoin legislation's AML/CFT requirements would allow bad actors to profit from the increased crypto trading.

Crypto Community's Response

Warren's letter has sparked reactions from the crypto community. Custodia Bank CEO and founder Caitlin Long criticized Warren for ignoring the risks to the banking system and urged her to consult someone with experience in de-risking a large bank. Pro-crypto candidate John Deaton, who is challenging Warren for her Senate seat, accused her of working on behalf of the banking industry.

Conclusion:

In summary, Senator Elizabeth Warren has called for expanding AML/CFT obligations to cryptocurrency miners, validators, and DeFi intermediaries, citing concerns about sanctioned countries and terrorist organizations exploiting these channels for illegal activities. While her letter has sparked reactions from the crypto community, it highlights the need for robust regulations to prevent illegal activities in the crypto market.