Senators Against DeFi
A bipartisan group of United States Senators, including Jack Reed, Mike Rounds, Mark Warner, and Mitt Romney, has introduced the CANSEE Act to regulate decentralized finance (DeFi) platforms. The aim of the legislation is to combat money laundering and other financial crimes in the crypto space. The CANSEE Act would require DeFi platforms to adhere to the same anti-money laundering (AML) and economic sanctions obligations as traditional financial institutions.
DeFi To Get More Centralized
The CANSEE Act would bring tighter regulations to the DeFi sector, bringing it in line with centralized institutions such as banks and securities brokers. DeFi platforms would need to establish AML programs, conduct customer due diligence, and report suspicious transactions. The legislation would also hold accountable any investor who puts more than $25 million into a DeFi project without clear oversight.
Crypto ATMs In Trouble
The CANSEE Act would also extend its reach to crypto ATMs, which are seen as having a higher risk of being used for money laundering. Operators of crypto ATMs would be required to conduct identity checks for all participants in each transaction. The goal is to provide law enforcement with better information about cryptocurrency transactions to combat crimes like drug trafficking and ransomware attacks.
Industry Criticizes DeFi Bill
The CANSEE Act has faced criticism from the crypto industry, with experts calling it an “existential threat to DeFi.” Critics argue that the bill’s control responsibilities could discourage venture capitalists from investing in DeFi. The Crypto Council for Innovation believes that the legislation lacks specific guidance on how decentralized protocols can comply with reporting requirements and suggests using blockchain transparency and programmability to establish tailored compliance measures.
Hot Take
The introduction of the CANSEE Act reflects growing concerns about money laundering and financial crimes in the crypto space. While the legislation aims to bring more oversight and accountability to DeFi platforms, it has faced backlash from industry players who argue that it could stifle innovation and investment. Striking a balance between regulation and fostering innovation will be crucial in shaping the future of decentralized finance.
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