Crypto Crackdown: Warren’s Bid to Stop Sanctions Dodging

• U.S. Senator Warren targeted crypto, citing the need for tough anti-money laundering legislation.
• Crypto crime shifts despite an overall decrease in illicit transactions

Senator Elizabeth Warren has again reignited the debate on cryptocurrency regulation. Warren’s statement, delivered via X (formerly Twitter), cites a recent Government Accountability Office (GAO) report. 

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A new @USGAO report confirms that rogue nations are using crypto to dodge sanctions and undermine our national security.

It’s time for crypto to follow the same anti-money laundering rules as everyone else. I’ve got a bill to make it happen. https://t.co/TUX2sJ8HR0

— Elizabeth Warren (@SenWarren) January 21, 2024

The report primarily focuses on how digital assets, such as Bitcoin (BTC) and other virtual currencies, pose risks to the implementation and enforcement of U.S. sanctions. Moreover, it goes on to explain the factors that contribute to the partial mitigation of the risks. 

In her statement, Senator Warren also stressed the importance of bringing cryptocurrency operations under the same anti-money laundering (AML) rules that govern other financial entities.

Warren’s crypto poison bill

Senator Warren, a vocal critic of both cryptocurrencies, has proposed the “Digital Asset Anti-Money Laundering Act.” It aims to tighten regulations on cryptocurrency in relation to illicit finance. 

If enacted, it would expand Bank Secrecy Act requirements, including know-your-customer (KYC) rules, to cover various crypto industry players such as miners, validators, and wallet providers.

In January 2024, during a Senate Banking, Housing, and Urban Affairs Committee hearing, Senator Warren also highlighted the urgency of addressing crypto’s role in the illegal fentanyl trade. She emphasized that current gaps in AML laws have inadvertently provided drug cartels and traffickers with a means to circulate their funds, thereby exacerbating the opioid crisis. 

“Crypto is enabling rogue nations, drug lords, ransomware gangs, and fraudsters to launder billions in stolen funds, evade sanctions, fund illegal weapons programs, and profit from devastating cyberattacks.”

The progress of the Digital Asset Sanctions Compliance Enhancement Act will be closely watched by both the cryptocurrency industry and policymakers. This act is significant as it may establish a benchmark for how digital assets are regulated in the United States, especially concerning issues related to national security. 

Crime and crypto

An analysis of the 2024 crypto crime trends by Chainalysis highlights key trends in cryptocurrency-related crime. 

In 2023, there was a notable decrease in the overall value received by illicit cryptocurrency addresses. The number dropped from $39.6 billion in 2022 to just $24.2 billion. 

Interestingly, while scamming and stolen funds saw a significant reduction, ransomware and darknet market activities experienced growth. The report also notes a shift in the types of assets used in crypto crimes. Stablecoins now dominate illicit transactions, replacing Bitcoin’s previous dominance. 

Crypto’s widespread adoption

The senator’s push for regulation comes at a pivotal time when the

popularity and adoption of cryptocurrencies are at an all-time high. According to Statista, global cryptocurrency adoption surged by nearly 190% between 2018 and 2020 and continued to accelerate in 2022.

As of this writing, there are over 420 million crypto owners worldwide, as reported by Triple-A. CoinMarketCap also reported a total global crypto market cap of $1.6 trillion at press time.

Lastly, Fortune Business Insights predicts the global cryptocurrency market will grow from $910.3 million in 2021 to $1,902.5 million in 2028 at an 11.1% compound annual growth rate (CAGR).