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Bipartisan Bill to Regulate DeFi, Crypto Security Risks Introduced in US Senate

United States Senator Jack Reed sponsored a bipartisan invoice launched within the Senate on July 18 that may tighten Know Your Buyer and Anti-Cash Laundering (KYC/AML) and sanctions necessities for Decentralized Finance (DeFi) . In keeping with a information launch on Reed’s web site, the invoice is titled the Crypto-Asset Nationwide Safety Enhancement and Enforcement (CANSEE) Act.

The invoice would topic DeFi operations to the identical necessities as “different monetary firms, together with centralized crypto buying and selling platforms, casinos and even pawnshops”. The invoice would make “any particular person controlling that challenge” responsible for using a DeFi service by accepted individuals. Forward:

“If nobody controls the DeFi service, then – as a backstop – anybody who invests greater than $25 million in creating the challenge will likely be responsible for these obligations.”

The invoice would additionally “modernize” the Treasury Division by transferring AML officers past the standard monetary system. In keeping with the assertion:

“As new applied sciences corresponding to cryptocurrencies are more and more enabling new methods to conduct monetary transactions, you will need to develop the Treasury’s authority to crack down on illicit monetary exercise that happens outdoors of the banking sector.”

The invoice additionally units new necessities for operators of crypto kiosks (or ATMs) to forestall their use in cash laundering. Kiosk operators might want to confirm the id of each the counterparties within the transaction.

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The invoice has not been revealed on the time of writing. A member of Reed’s employees contacted by Cointelegraph couldn’t say when the invoice can be revealed. A textual content claiming to be a draft of the invoice has been posted on GitHub.

Crypto Twitter wasted no time in condemning the invoice. a commentator called It’s “an existential risk to DeFi” and a “nonstarter”. yet another Said that “imposing management duty for a $25mm funding will chill VC funding in DeFi b/c passive tokenholding doesn’t equate to manage.”

Senators Mike Rounds, Mark Warner and Mitt Romney are co-sponsors of the invoice. Reed and Warner had been co-sponsors of the Digital Asset Sanctions Compliance Enhancement Act – a invoice launched in March 2022 by Senator Elizabeth Warren.

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