Bipartisan Bill Grants Treasury Authority Over DeFi
The bipartisan bill introduced by senators on Wednesday, July 19, is set to grant the US treasury authority over decentralized finance (DeFi). The proposed bill identifies DeFi and crypto automatic teller machines (ATM). The bill sponsors identify the crypto ATM and DeFi as the catalysts for financial crime.
The Bipartisan Senators’ bill tabled the proposals mandating the decentralized finance services to comply with the rules applied to centralized crypto exchanges and banks. The bill sponsored by Democrat Senator Jack Reed targets reigning in back actors, including drug traffickers, criminals, and hostile state agents leveraging DeFi to orchestrate the nefarious purpose.
CANSEE Bill Proposes Strict Compliance with Anti-Money Laundering
The bill is identified as the Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Act. The provisions compel the DeFi services to comply with the anti-money laundering (AML) rules and economic sanctions issued by the US government.
The bill defines the DeFi to imply services built by leveraging smart contracts and bypassing reliance on financial intermediaries. Further, decentralized finance exists on-chain as illustrated by the lending protocol Aave and exchange platform UniSwap.
The bill provides hefty penalties for any party that exercises control over a DeFi project when they allow sanctioned persons and entities to circumvent the restrictions by using the service. The bill directs that individuals investing over $25 million in a DeFi project would incur liability if no single entity exercises controls. The legislation extends the existing authority exercised by the US Treasury Department to crack down on illicit financial activities outside the banking sector.
While the bill’s full text is unavailable on the Congress’ Website, its provisions identify crypto ATMs as all destinations individuals can acquire crypto using cash and debit cards. The bill requires all crypto ATM operators to verify the identity of individuals executing the transactions.
CANSEE Bill Targets to Avert Repeat of Fentanyl Trafficking Catalyst in Crypto
The co-sponsors of the legislation include Democrat Mark Warner, franked by Republicans Mitt Romney and Mike Rounds. They described the bill as necessary to protect national security.
Mike Rounds expressed concerns that criminals and rogue state representatives continue using crypto to launder money, conceal illicit activities, and evade sanctions. He added that the participants playing by the rules could tap into the cryptocurrency potential.
The CANSEE bill references the cross-border fentanyl trafficking case to allege that bad actors identify with leveraging DeFi projects to fuel the illicit trade. The remarks mirror the concerns expressed by Massachusetts Senator Elizabeth Warren. The Democratic politician has been a vocal critic of unregulated cryptocurrency.
Approving the CANSEE bill will grant the Treasury more authority to pursue the back actors leveraging the DeFi projects and crypto ATMs to further their illicit activities. It will empower the department’s effort to reign control the existing vulnerability of crypto in becoming the conduit of funding illicit activities.
Treasury Sanctioning Tornado Cash
Previously, the US Treasury Department has pursued the decentralized protocols, as demonstrated by sanctioning Tornado Cash in 2022. The coin-mixing privacy platform became the preferred mode to conceal stolen funds. The move attracted criticism from whistleblower Edward Snowden terming it as profoundly authoritarian.
In a federal court, Coin Center challenges the Treasury Department’s action, alleging unfair penalty to the DeFi project. The crypto advocacy group submitted that handling such unfair penalties would set a dangerous precedent in the country.
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