Regulation
Republican Sen. Tillis calls for ‘light-touch’ crypto regulatory framework ahead of presidential election
U.S. Sen. Thom Tillis (R-N.C.) said Tuesday that the crypto industry needs a “light-touch” regulatory framework in place to both combat risks – including another type collapse FTX and illicit financing of terrorism – and creating a “hospitable environment”. in which digital assets can thrive.
The remarks were made Tuesday during a meeting of the Senate Banking Committee with Deputy Treasury Secretary Wally Adeyemo, who testified about Treasury’s efforts to combat illicit financing, terrorism and sanctions evasion. Adeyemo also urged Committee members to obtain “additional tools” to combat crypto crime, following legislative demands he made last November.
“One thing I would say to people in the crypto or digital assets space who say ‘Nothing to see here, everything is fine’ – they are wrong,” Senator Tillis said. “There needs to be a light regulatory regime in place, otherwise there are risks… We want to create the most hospitable environment for digital assets to thrive. We don’t want to go too far and lose the opportunity to be that jurisdiction.
Tillis added that if there was a change in administration after the November presidential election, the vision for how to regulate crypto would be “very different.”
“For my part, I would like to study the possibility of working with [the Treasury Department] to address some of the things on your takeaway list that we agree with, so that we can be able to pass regulations in this Congress that certainly won’t go as far as some of my colleagues across the aisle would like to go ahead, but [will be] a far cry from the Wild West we find ourselves in now,” Tillis said.
On Monday, Tillis and Sen. Bill Hagerty (R-Tenn.) released a discussion project of a new bill – the Ensuring Necessary Financial Oversight and Reporting of Cryptocurrency Ecosystems (ENFORCE) Act – aimed at ensuring that centralized cryptocurrency companies adhere to Bank Secrecy Act (BSA) and Antitrust standards money laundering (AML).
Democratic members of the Senate Banking Committee, including Sen. Elizabeth Warren (D-Mass.), Sen. Mark Warner (D-Va.) and Sen. Bob Menendez (D-N.J.), have also called for more regulations in cryptography.
“Name your bad guy, and crypto is how he can move money,” Senator Warren said.
Warren added that validators – who validate transactions on proof-of-stake blockchains – are not subject to the same anti-money laundering (AML) and know-your-customer (KYC) laws as banks.
“Stablecoins make it easy to convert dollars to crypto and crypto to dollars, so they are a gateway into the crypto world,” Warren said. “If we want to create new avenues of entry… then we need a regulatory framework that will put in place anti-money laundering rules so that we don’t have new opportunities for Iran, terrorists , drug lords and human traffickers to earn more. money.”
During the hour-long hearing, Adeyemo argued that Treasury needed expanded powers to effectively crack down on illicit cryptocurrency financing.
Adeyemo told the Committee that as Treasury has improved its ability to cut off foreign enemies – including state actors like Iran, Russia and North Korea, as well as terrorist groups like Hamas and Al -Qaeda – from the traditional financial system, they are increasingly turning to crypto as a workaround.
He asked Congress for three legislative reforms. First, a “secondary sanctions tool” against exchanges that facilitate illicit financing, which would “help the Treasury develop its targeting capabilities.”
Second, Adeyemo requested an expansion of Treasury’s scope to “explicitly cover key players and core activities in the digital asset ecosystem.”
Finally, he called for reform to address “jurisdictional risk related to offshore cryptocurrency platforms,” which would allow the Treasury to “clarify that our authorities can act extraterritorially when digital asset entities harm our security nationally while taking advantage of our financial system. In addition to combating illicit financing, Adeyemo added that this reform would also “promote a level playing field for U.S.-based VASPs.”