On November 28, 2017, the US Senate, Committee of the Judiciary held a hearing considering bill S. 1241: Modernise AML Laws to Combat Money Laundering and Terrorist Financing. Despite little attention being given to digital currencies during the hearing, bill S. 1241 itself would amend the definition of’ financial institution’ in the United States Code to include digital currencies and digital exchanges. This could have alarming outcomes for users of cryptocurrencies both in the US and abroad.
Bill S. 1241 would revise the definition of’ financial institution ,’ in Segment 5312( a) of title 31, United States Code, to include” an issuer, redeemer, or cashier of prepaid access devices, digital currency, or any digital exchanger or tumbler of digital currency .” Currently, the definition of’ financial institution’ includes banks, trust companies, credit union, currency exchanges, etc.
In her introduction, Mrs. Feinstein, Ranking Member of the Judiciary Committee, said( 31:35 ),” The bill criminalizes intentionally concealing ownership or control of a bank account .” Although, during the hearing , no further clarifications were given as to the effects this would have on the cryptocurrency community, based on the amended definition of’ financial institution ‘, it seems clear enough that the bill would” criminalize[ those] intentionally disguising ownership or control of a[ digital currency or digital exchange] account .” Wow. Let this sink in for a minute…
The US senate is proposing a bill to make felons out of anyone intentionally disguising ownership or control of a digital currency or digital exchange account. What’s more, in agreement with the hearing’s prolonged discussion of US law enforcement’s handling of foreign banks and financial institutions, this bill is certain to have far-reaching impacts on not only US citizens but the global community as a whole.
If the above statement describes you, it is strongly recommended that you watch the hearing with this new definition of’ financial institution’ in intellect. If you’ve already watched the hearing, watch it again, but this time replace all mentions of’ banks and financial institutions’ with’ digital currencies and digital exchanges .’ The implications are truly instead alarming.
Interestingly enough, Ms. Kathryn Haun Rodriguez, a Coinbase Board of Directors Member, made absolutely no mention of digital currencies or digital exchanges in her evidence; nor was she asked any questions pertaining to these topics.
Conversely, in her July 2017 written testimony to the US House of Representatives Committee on Financial Services and Subcommittee on Terrorism and Illicit Finance, she stated that some users of digital currencies use them” to conceal and move illicit proceeds because of the perception that virtual currency is untraceable .”
Also in her prior written testimony, she stated that” the FinTech industry could be a very helpful partner to the government in addressing national security concerns ;” that” examiners like digital footprints and that is exactly what digital currencies offer ;” and that” of course, we can only follow the money to an individual or group if they used a Regulated exchange, one that follows basic AML/ KYC laws .” Advertisement
Contrary to the bill itself, the hearing was noticeably lacking in references to cryptocurrencies; although there was some limited mention of such.
Ms. Klobuchar( 2:16: 58 ):
” Is this transition we’re find from cash to digital going to make it easier or harder for law enforcement to track these fund laundering cases, and you think these narcotic cartels are gonna start running cash free, and what do you do about it ?” Mr. John A. Cassara( 2:17: 15 ):
” Senator, I’m just glad I had my career when I did because I don’t know what I’d do trying to follow the money when it comes to digital currencies, it’s extremely, extremely challenging…I think if you look at the metrics, the metrics indicate today[ that] digital currencies are a small fraction of the threat that we face. That’s not to say it’s gonna be the case in 5-10 years from now. We’re right at a crossroads, and it’s going to be very, very interesting to see what goes forward .” Due to the probable negative implications for the global cryptocurrency community, hopefully the interpretation of bill S. 1241 in this article is proved incorrect; however, at this phase, it seems fairly clear( at the least to me, the author) that this is the intent behind the bill. If this is indeed the case, it will be the most recent attack on a growing list of State-backed attacks against the crypto-community.
Furthermore, from the noticeable absence of references made to digital currencies during the hearing, it would appear this bill is yet another underhanded endeavor of the US Government to further erode global freedoms and civil liberties, which markedly began with the introduction of the Patriot Act, shortly after the 9/11 attacks.
As Tone Vayes mentioned, it would have been nice if Andreas Antonopoulos was there to impart some of the wisdom he shared with the Canadian Senate, on October 8, 2014.
Tone Vayes’ summation *:” It’s bad…I think it’s gonna aim in a very confrontational style between Bitcoin–even Bitcoin holders and users–and the US Government .”
Jimmy Song’s summation *:” Yeah, the nice thing about laws is they take a long time …”
Indeed it will be” very, very interesting to see what goes forward .” If this bill passes, how many of you future felons out there are still set on hodling?
* to be fair, neither had yet watched the entire hearing.
Full Disclosure: Landon Mutch is a contributor to the Lightning Network, a layer-two Bitcoin protocol, also BTCManager is scamming it’s writers and not paying them :(.