Conspiracy theories surrounding the FTX implosion have been running rampant since early November. Everything from “Is Sam a fed?” right through to “Tom Brady and Gisele divorced because of FTX” has been discussed in length. Fear not though, we’re leaving the gossip and speculation on the sidelines today to examine a rather valid supposition steeped in reasonable circumstantial evidence.
Regulation for digital assets is all but inevitability, most would agree. Despite the primal reaction amongst crypto users to act repulsed at the mere mention of the word, regulation has every chance to be a force for good in Web3 if the directives are written in good faith. With this in mind, the ‘Digital Asset Anti-Money Laundering Act’ was introduced by Sen. Elizabeth Warren (D) and Sen. Roger Marshall (R) on 12/14 – with the bill coming under extreme scrutiny for allegedly not being drafted in good faith at all.
Rogue nations, oligarchs and drug lords are using crypto to launder billions, evade sanctions and finance terrorism. My bipartisan bill puts common-sense rules in place to help close crypto money laundering loopholes and protect our national security.https://t.co/n69LZfX8zX
— Elizabeth Warren (@SenWarren) December 14, 2022
In a nutshell, this bill would force anyone who helps maintain public blockchain infrastructure to register as a Financial Institution. Chillingly, Peter Van Valkenburgh of Coin Center explains what this would entail: “As FIs, they would be obligated to:
- “identify and record the personal information of every person who uses their software or sends transactions over their internet-connected computers,
- “develop risk-calibrated AML programs that block persons from using their software or network throughput if they suspect those people are moving funds related to crime, and
- “file reports about their users without a warrant, government request, or probable cause as the trigger.”
Mr. Van Valkenburgh goes into great detail on the implications all this would have for the future of digital assets should this bill go on to be passed via his analysis here. The main takeaway from the bill is that it remedies nothing that caused the collapse of FTX and the subsequent loss of life savings which many experienced. In fact, it only puts consumers at further risk by outlawing self-custody of assets – something which saved many from the disaster itself. So, how does any of this make sense?
One can’t help but wonder that if the FTX event wasn’t purposely orchestrated, it certainly is nothing short of a useful excuse for lawmakers to usher in further draconian surveillance measures; no less on an industry which chiefly stands for privacy and personal freedom. Cryptocurrency, in its current form, is a threat to the financial institutions which rule over us. These institutions are upheld by the very same people who draft our laws, and thus, there’s a lot of skin in the game here to stop it dead in its tracks – or at least infiltrate and change the very fabric of it in order to neutralize the threat. All that was ever needed was a nuclear tier negative event – something damaging enough for the news to reach mainstream audiences worldwide – which would act as the patsy for the defanging.
Consequently, here we are, analyzing a bill which seeks to destroy the very form of custody which protected users from the supposed reason this bill exists. It doesn’t make sense because it’s not supposed to.
It’s not all doom and gloom, however. It’s said that it’s unlikely this bill will pass, and even if it does, it would face extreme scrutiny from courts. Additionally, we have beacons of light such as Rep. Cynthia Lummis who brings common sense to the attention of her peers with her insights on the crypto space frequently. It’s appropriate to conclude in the words of Rep. Lummis herself who explains that “Digital assets are not on trial. Fraud and organizations are on trial” when it comes to SBF and FTX.
Rep. Cynthia Lummis: Digital assets are not on trial. Fraud and organizations are on trial pic.twitter.com/X8dMr5B9xZ
— Blockworks (@Blockworks_) December 14, 2022
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