The Blockchain Association, an industry trade group representing the crypto industry in Washington D.C., sent a second letter to leadership in the House Financial Services Committee and Senate Banking Committee expressing deep concern over a bill titled the Digital Asset Anti-Money Laundering Act of 2023 (DAAMLA). Senator Elizabeth Warren (D-Mass.) sponsored the legislation, with 19 other Senators having supported the bill as co-sponsors.
The first letter sent by the Blockchain Association in November of 2023 had 40 signatories from former U.S. military, national security and intelligence officers, while this new letter has 80 signatories from individuals with similar backgrounds. While the first letter focused on what many described as an overblown narrative around how cryptocurrency played a role 2023 Hamas-led attack on Israel, the new letter focuses on the policy aspects of Warren’s DAAMLA legislation.
According to the Blockchain Association letter, Warren’s legislation, “…risks our nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.” The message of the letter is also described as a response to a letter from Warren to the Blockchain Association. Warren claimed in her letter that the Blockchain Association was, “…flexing a not-so secret weapon: a small army of former defense, national security and law enforcement officials…to undermine bipartisan efforts in Congress and the Biden Administration to address the role of cryptocurrency in financing Hamas and other terrorist organizations.”
Warren was referring to how the Blockchain Association helped coordinate a visit to Capitol Hill to discuss the issues raised in their first letter back in November of last year. Coinbase as well as the think tank Coin Center also received similar letters from Warren. The Blockchain Association claims in their new letter to Warren that she, “… questioned the motivations and integrity of scores of U.S. military and intelligence veterans without addressing the substance of our arguments…”.
At a minimum, with Warren having convinced 19 other U.S. Senators to join her, that there is both an ongoing discussion in the Senate as well as momentum toward some kind of legislation on the Hill to address the illicit use of cryptocurrencies. However, the Chair of the Senate Banking Committee, Senator Sherrod Brown (D-OH), has not yet signed on to the DAAMLA or any other legislation himself. As Chair, Brown still has a great deal of power as to what kind of crypto legislation if any may move from the Senate Banking Committee to the full Senate for consideration.
The Blockchain Association letter argues that, “the Digital Asset Anti-Money Laundering Act (DAAMLA) risks our nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.” Part of the DAAMLA bill would consider all bitcoin miners and validators of other blockchains to be responsible for conducting Know-Your-Customer (KYC) and Bank Secrecy Act (BSA) regulations, which many in the industry say is unworkable and basically impossible because of the way the technology works.
The new letter indicates that the Blockchain Association will be coordinating another visit on the Hill in March to speak to policymakers in detail about the problems with the DAAMLA legislation. As the crypto industry expresses its concerns about the way new legislation is developing that could impact its business, these new developments would seem to indicate that the stakes are getting even higher for U.S. crypto policy going forward.