4 ms·

Sen. Warren's new bill to regulate crypto, combat money laundering [pdf]

33 points by jasonhansel 4y ago

yalogin 4y ago
I did not read this bill, but I am vey worried that regulating it will bring crypto into the fold of regular financial markets/constructs and the government will bail out any perpetrators of fraud or mismanagement, like SBF, going forward. We have collectively lost the ability to say you screwed up and so you suffer the consequences and instead bail out collective failures of corporations. The larger the failure the higher the chance of bail out. I honestly don't see any value in crypto, am not alone in that, and unless that changes I don't want it to brought up to par with USD based constructs. I should add that I would like to be educated if I am wrong in this thought process.
- andsoitis 4y ago
  > government will bail out any perpetrators of fraud What’s an example where this happened in the past?
  - renonn 4y ago
    i’m sure you can think of one if you try
- kube-system 4y ago
  > the government will bail out any perpetrators of fraud or mismanagement, like SBF, going forward. The US government bails out very few financial institutions. https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ https://www.fdic.gov/resources/resolutions/bank-failures/fai...
- albinofrenchy 4y ago
  It isn't clear to me that regulations could or would cause that. Or that not being regulated would prevent it. FDIC / SIPC type protections would be beneficial to consumers in cases like FTX. I'm guessing if a crypto version of those things existed, FTX would have massively failed to secure membership since by all accounts it was outright fraud. And if they did, US consumers would receive some portion of their funds back. I think things like ethereum could have real value but as long as the landscape is littered with rugpulls and ponzi schemes I don't think it will realize that potential.
monero-xmr 4y ago
This would outlaw the cryptocurrency industry in the USA. Anyone running a miner or proof-of-stake validator would be a money services business, meaning they would have to collect personal identity information on anyone submitting transactions to the network. This is technically impossible. This bill will not pass, but if in some universe it did, the blockchain industry would move entirely offshore. It will not kill the industry, but certainly set it back and make the US a non-entity. This is a very reactionary, "don't let a crisis go to waste" situation following the FTX debacle.
- jasonhansel 4y ago
  Why should crypto be exempt from the regulations applied to other financial institutions?
  - mgamache 4y ago
    because cash is a dying animal and without it we have zero privacy.
    - jasonhansel 4y ago
      In that case, shouldn't we get rid of money laundering regulations for all financial institutions? That would (presumably) provide even more privacy; there's no reason to make crypto an exception.
      - someguydave 4y ago
        yep, this should happen
      - kodyo 4y ago
        I accept your terms.
  - DennisP 4y ago
    Why should hot dog vendors be exempt from regulations applied to financial institutions? Answer: because they're not financial institutions. Neither are bitcoin miners or proof-of-stake validators. Centralized exchanges like FTX, on the other hand, absolutely should be subject to those regulations. But in the US they pretty much already are. FTX was in the Bahamas.
Mistletoe 4y ago
Is money laundering with crypto even a large percentage of it? A public fully traceable blockchain isn’t great at that… https://cryptoslate.com/money-laundering-0-05-of-all-crypto-transactions-in-2021-chainalysis-report/ https://cryptoslate.com/money-laundering-0-05-of-all-crypto-... Every exchange has kyc rules. Sure people can fake the kyc but we are splitting hairs here. We absolutely have to have crypto to avoid the dark maelstrom that is CBDCs. https://www.finextra.com/blogposting/21584/the-risks-to-society-of-central-bank-digital-currencies https://www.finextra.com/blogposting/21584/the-risks-to-soci...
- mgamache 4y ago
  No the vast majority of money laundering is cash. CBDCs will be used to fight that in the next 20 years.
  - danaris 4y ago
    I mean, obviously that's true. The question isn't "is a large percentage of money laundering done through crypto?" It's "is a large percentage of the traffic of crypto money laundering?"
mgamache 4y ago
She really hates "anonymity-enhancing technologies". It's not your money, it's a tool for leverage. Anything outside of the CBDC system is a threat.
- TeeMassive 4y ago
  She's always been on the side of the administrative managerial class. The Progressive stuff was always a marketing strategy.
  - lost_tourist 4y ago
    I don't think so, she is very liberal on personal freedoms unlike the current iteration of the republican party; however she obviously is a bit of a nerd and has an axe to grind with banks and wall street.
    - DennisP 4y ago
      If she were consistent about those values, she'd write a bill that tightens regulations on centralized exchanges instead of on individuals running validators in their bedrooms. Either her values aren't what you think, or she's put zero effort into learning anything about the technology she's trying to regulate.
    - Mountain_Skies 4y ago
      Ironic since the first time I heard about her was from conservative homeschooling types who were big fans of her due to her book 'The Two Income Trap'.
    - TeeMassive 4y ago
      She never introduced a bill to codify abortion before Roe was overturned instead of using it for fundraising. She supported Hillary even when she supported the no-bankruptcy bill on student loans. Again, it's only for marketing.
ablatt89 4y ago
"shall promulgate a rule that prohibits financial institutions from— (1) handling, using, or transacting business with digital asset mixers, privacy coins, and other anonymity-enhancing technologies, as specified by 6 the Secretary" Essentially, Warren and other privacy violating nutters want the identity of every crypto transaction. One can argue this is to curtail "laundering" at the tradeoff of privacy violation. Should every cash transaction also involve some receipt or the government will deem the transaction illegal? Will "cash only" businesses become illegal? It seems like Warren still has similar views to many privacy violating politicians and administrators in the Bush administration...
- drexlspivey 4y ago
  The cypherpunks have been preparing for senator Karen for their entire life.
aschearer 4y ago
I did not read the bill, either, but I am very worried that all those contributions by SBF haven't swayed the Democrats at all! Does she hate all red blooded Americans or just cryptocurrency enthusiasts, I can't decide! Either way, I'm upset and you should be too.
dang 4y ago
Proposed bills usually don't come to much, so generally it's better to wait for a more substantial story for a thread. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=by%3Adang%20bills%20propos&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...
lordfrito 4y ago
I don't see how this is being spun as a bad thing. The devil is in the details, but this has been a long time coming. You don't get to do business with Americans but not follow American law. If companies don't want to abide by the new regulations, they're free to continue doing business offshore. If you don't want to play by the rules by all means setup shop in another country that will accept you. Story as I understand it so far - Gullible Americans invest in shady "line-go-up" businesses that exist outside of established legal framework - Gullible Americans lose massive amounts of money due to systemic fraud and have no recourse for legal action - Gullible Americans complain to US government - US Government, doing it's job, passes laws setting up new rules and regulations for safely doing crypto business with Gullible Americans (KYC etc) - Gullible Americans now have legal recourse, but find that the crypto space isn't nearly as magical as it was before. - Many of these Gullible Americans now decide go to the casino instead, or get in on that traditional MLM scheme their friend kept pitching them that now sounds great. - A smaller number continue to send $$$ to shady overseas entities, hoping that more $$$ eventually come back, and complaining to everyone when it doesn't, but no one listens this time. A fool and his money are soon parted. Meet me in the back alley at midnight, I have a bridge to sell you. Unregulated finance should be treated the same as a back alley deal, good luck to you. What's the issue here?
- DennisP 4y ago
  I agree that central exchanges should be regulated, and in the US they are. If the US can get foreign exchanges to behave, so much the better. The issue is classifying an individual running a small miner/validator in their bedroom as a money service business (Sec 3(a) in the bill), requiring them to do the impossible by collecting KYC on whatever transactions cross the network.
  - lordfrito 4y ago
    KYC is indeed burdensome. But laws on money laundering being what they are, you can't claim ignorance. There's a minimum standard to be met when handling money in aggregate. If you don't know your customer, how do you know you aren't part of the problem? Criminal organizations are great at hiding finances by exploiting loopholes at scale, and unregulated crypto is one hell of a loophole. The laws are setup to get everyone up and down the criminal chain-of-command, guilt by association. It's a good thing that criminals have a hard time finding financial institutions that will take their ill-gotten gains. Unfortunately there is no semi-safe DMZ between highly-regulated and unregulated finance. It's pretty much binary. Regulated finance continues to grow until it touches everything legit, everything else gravitates to shadow overseas/back-alley finance.
daVe23hu 4y ago
when she claimed to be a Native American I just can't take her seriously
hackrnusr 4y ago
Warren should propose a bill that outlaws government workers stealing from taxpayers ... and paying their salaries through letting the Fed inflate away the value of the US dollar.

33 points by jasonhansel 4y ago

I did not read this bill, but I am vey worried that regulating it will bring crypto into the fold of regular financial markets/constructs and the government will bail out any perpetrators of fraud or mismanagement, like SBF, going forward. We have collectively lost the ability to say you screwed up and so you suffer the consequences and instead bail out collective failures of corporations. The larger the failure the higher the chance of bail out. I honestly don't see any value in crypto, am not alone in that, and unless that changes I don't want it to brought up to par with USD based constructs. I should add that I would like to be educated if I am wrong in this thought process.

andsoitis 4y ago
> government will bail out any perpetrators of fraud What’s an example where this happened in the past?
- renonn 4y ago
  i’m sure you can think of one if you try
kube-system 4y ago
> the government will bail out any perpetrators of fraud or mismanagement, like SBF, going forward. The US government bails out very few financial institutions. https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/ https://www.fdic.gov/resources/resolutions/bank-failures/fai...
albinofrenchy 4y ago
It isn't clear to me that regulations could or would cause that. Or that not being regulated would prevent it. FDIC / SIPC type protections would be beneficial to consumers in cases like FTX. I'm guessing if a crypto version of those things existed, FTX would have massively failed to secure membership since by all accounts it was outright fraud. And if they did, US consumers would receive some portion of their funds back. I think things like ethereum could have real value but as long as the landscape is littered with rugpulls and ponzi schemes I don't think it will realize that potential.

monero-xmr 4y ago

This would outlaw the cryptocurrency industry in the USA. Anyone running a miner or proof-of-stake validator would be a money services business, meaning they would have to collect personal identity information on anyone submitting transactions to the network. This is technically impossible. This bill will not pass, but if in some universe it did, the blockchain industry would move entirely offshore. It will not kill the industry, but certainly set it back and make the US a non-entity. This is a very reactionary, "don't let a crisis go to waste" situation following the FTX debacle.

jasonhansel 4y ago
Why should crypto be exempt from the regulations applied to other financial institutions?
- mgamache 4y ago
  because cash is a dying animal and without it we have zero privacy.
  - jasonhansel 4y ago
    In that case, shouldn't we get rid of money laundering regulations for all financial institutions? That would (presumably) provide even more privacy; there's no reason to make crypto an exception.
    - someguydave 4y ago
      yep, this should happen
    - kodyo 4y ago
      I accept your terms.
- DennisP 4y ago
  Why should hot dog vendors be exempt from regulations applied to financial institutions? Answer: because they're not financial institutions. Neither are bitcoin miners or proof-of-stake validators. Centralized exchanges like FTX, on the other hand, absolutely should be subject to those regulations. But in the US they pretty much already are. FTX was in the Bahamas.

Mistletoe 4y ago

Is money laundering with crypto even a large percentage of it? A public fully traceable blockchain isn’t great at that… https://cryptoslate.com/money-laundering-0-05-of-all-crypto-transactions-in-2021-chainalysis-report/ https://cryptoslate.com/money-laundering-0-05-of-all-crypto-... Every exchange has kyc rules. Sure people can fake the kyc but we are splitting hairs here. We absolutely have to have crypto to avoid the dark maelstrom that is CBDCs. https://www.finextra.com/blogposting/21584/the-risks-to-society-of-central-bank-digital-currencies https://www.finextra.com/blogposting/21584/the-risks-to-soci...

mgamache 4y ago
No the vast majority of money laundering is cash. CBDCs will be used to fight that in the next 20 years.
- danaris 4y ago
  I mean, obviously that's true. The question isn't "is a large percentage of money laundering done through crypto?" It's "is a large percentage of the traffic of crypto money laundering?"

mgamache 4y ago

She really hates "anonymity-enhancing technologies". It's not your money, it's a tool for leverage. Anything outside of the CBDC system is a threat.

TeeMassive 4y ago
She's always been on the side of the administrative managerial class. The Progressive stuff was always a marketing strategy.
- lost_tourist 4y ago
  I don't think so, she is very liberal on personal freedoms unlike the current iteration of the republican party; however she obviously is a bit of a nerd and has an axe to grind with banks and wall street.
  - DennisP 4y ago
    If she were consistent about those values, she'd write a bill that tightens regulations on centralized exchanges instead of on individuals running validators in their bedrooms. Either her values aren't what you think, or she's put zero effort into learning anything about the technology she's trying to regulate.
  - Mountain_Skies 4y ago
    Ironic since the first time I heard about her was from conservative homeschooling types who were big fans of her due to her book 'The Two Income Trap'.
  - TeeMassive 4y ago
    She never introduced a bill to codify abortion before Roe was overturned instead of using it for fundraising. She supported Hillary even when she supported the no-bankruptcy bill on student loans. Again, it's only for marketing.

ablatt89 4y ago

"shall promulgate a rule that prohibits financial institutions from— (1) handling, using, or transacting business with digital asset mixers, privacy coins, and other anonymity-enhancing technologies, as specified by 6 the Secretary" Essentially, Warren and other privacy violating nutters want the identity of every crypto transaction. One can argue this is to curtail "laundering" at the tradeoff of privacy violation. Should every cash transaction also involve some receipt or the government will deem the transaction illegal? Will "cash only" businesses become illegal? It seems like Warren still has similar views to many privacy violating politicians and administrators in the Bush administration...

drexlspivey 4y ago
The cypherpunks have been preparing for senator Karen for their entire life.

aschearer 4y ago

I did not read the bill, either, but I am very worried that all those contributions by SBF haven't swayed the Democrats at all! Does she hate all red blooded Americans or just cryptocurrency enthusiasts, I can't decide! Either way, I'm upset and you should be too.

dang 4y ago

Proposed bills usually don't come to much, so generally it's better to wait for a more substantial story for a thread. https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=by%3Adang%20bills%20propos&sort=byDate&type=comment https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

lordfrito 4y ago

I don't see how this is being spun as a bad thing. The devil is in the details, but this has been a long time coming. You don't get to do business with Americans but not follow American law. If companies don't want to abide by the new regulations, they're free to continue doing business offshore. If you don't want to play by the rules by all means setup shop in another country that will accept you. Story as I understand it so far - Gullible Americans invest in shady "line-go-up" businesses that exist outside of established legal framework - Gullible Americans lose massive amounts of money due to systemic fraud and have no recourse for legal action - Gullible Americans complain to US government - US Government, doing it's job, passes laws setting up new rules and regulations for safely doing crypto business with Gullible Americans (KYC etc) - Gullible Americans now have legal recourse, but find that the crypto space isn't nearly as magical as it was before. - Many of these Gullible Americans now decide go to the casino instead, or get in on that traditional MLM scheme their friend kept pitching them that now sounds great. - A smaller number continue to send $$$ to shady overseas entities, hoping that more $$$ eventually come back, and complaining to everyone when it doesn't, but no one listens this time. A fool and his money are soon parted. Meet me in the back alley at midnight, I have a bridge to sell you. Unregulated finance should be treated the same as a back alley deal, good luck to you. What's the issue here?

DennisP 4y ago
I agree that central exchanges should be regulated, and in the US they are. If the US can get foreign exchanges to behave, so much the better. The issue is classifying an individual running a small miner/validator in their bedroom as a money service business (Sec 3(a) in the bill), requiring them to do the impossible by collecting KYC on whatever transactions cross the network.
- lordfrito 4y ago
  KYC is indeed burdensome. But laws on money laundering being what they are, you can't claim ignorance. There's a minimum standard to be met when handling money in aggregate. If you don't know your customer, how do you know you aren't part of the problem? Criminal organizations are great at hiding finances by exploiting loopholes at scale, and unregulated crypto is one hell of a loophole. The laws are setup to get everyone up and down the criminal chain-of-command, guilt by association. It's a good thing that criminals have a hard time finding financial institutions that will take their ill-gotten gains. Unfortunately there is no semi-safe DMZ between highly-regulated and unregulated finance. It's pretty much binary. Regulated finance continues to grow until it touches everything legit, everything else gravitates to shadow overseas/back-alley finance.

daVe23hu 4y ago

when she claimed to be a Native American I just can't take her seriously

hackrnusr 4y ago

Warren should propose a bill that outlaws government workers stealing from taxpayers ... and paying their salaries through letting the Fed inflate away the value of the US dollar.