Sen. Warren Emerging as Chief Crypto Opponent in New Congress
Sen. Elizabeth Warren, D-MA, is doing everything in her power to position herself as the legislative nemesis of crypto. But she’s not working alone. Warren is putting together a bipartisan opposition to crypto, recruiting conservative Republicans and, of course, bank lobbyists to her crusade.
According to Politico, Warren is positioning herself as the lead lawmaker on crypto oversight. Her proposals would have wide-ranging and negative implications for the crypto space, focusing on enacting onerous anti-money laundering restrictions and Know Your Client rules that would devastate the privacy that crypto users value. And she has support in some quarters on the other side of the aisle.
“I want to emphasize how good her office has been to work with,” said Sen. Roger Marshall, the Kansas Republican who co-sponsored Warren’s legislation.
Crypto advocates are resisting Warren’s push, and some dismiss her as an outlier. But her budding partnership with GOP lawmakers reflects broader forces that are poised to unite progressives and conservatives, watchdog groups and bankers, who share common cause in wanting to derail the unfettered growth of crypto.
That’s in stark contrast to last year, before the crypto market meltdown, when digital currency lobbyists had gained serious traction with lawmakers who drafted friendlier, bipartisan legislation with the industry’s input.
“It’s up to the crypto sector to prove at this point that they’re safe, secure and superior, and I don’t think they’ve made that case,” said Paul Merski, who leads congressional relations at the Independent Community Bankers of America.
The loosely aligned camps of crypto skeptics have been emboldened by last year’s collapse of the FTX exchange, which revealed extensive industry mismanagement and led to the arrest of former CEO Sam Bankman-Fried.
“What matters to me is [Bankman-Fried] spread money around Capitol Hill like it was dishwater, and nobody stopped at the time to ask any relevant questions about this company,” said Sen. John Kennedy, a Louisiana Republican who has joined Warren’s effort to investigate crypto-friendly bank Silvergate, which is under scrutiny for its ties to FTX.
Crypto advocates have tried to reject Warren’s anti-money laundering bill in the strongest possible terms, criticizing it as a broad, unconstitutional threat to privacy that could sweep in a range of software products beyond just finance-focused digital assets. Some former regulators are also taking issue with the bill.
The Treasury Department’s Financial Crimes Enforcement Network has already been policing illicit finance in crypto for years. Centralized crypto exchanges that register as money transmitters are required to verify their customers’ identities. Warren’s bill would extend those kinds of responsibilities to other entities, including digital asset wallet providers and crypto miners.
“It’s so vague and broad-reaching that just understanding and implementing its ramifications could take years,” said Hogan Lovells partner Liz Boison, a former federal prosecutor who also worked at the Consumer Financial Protection Bureau when Warren was launching the agency.