New US Senate Bill Targets Bringing DeFi to Heels by Compliance

A Delicate Balancing Act: Crypto Regulation and Innovation

The world of cryptocurrencies and decentralized finance (DeFi) has been a hotbed of discussion in recent years, with their rapid growth and staying power attracting attention from policy makers and investors alike. However, regulating the crypto industry has proven to be a challenging task, as it requires a fine balance between protecting investors, complying with international law and encouraging innovation.

CANSEE Act Faces Criticism: Crypto Community Voices Concern

A bipartisan group of lawmakers in the United States recently proposed the National Crypto-Asset Security Enhancement and Enforcement Act (CANSEE) to bring the DeFi sector into compliance with anti-money laundering (AML) rules. The bill aims to regulate DeFi protocols and the platforms that provide access to these protocols, placing them under the same supervision as traditional financial institutions.

According to the press statement, platforms such as decentralized exchanges and wallet providers will be held accountable for AML violations and any sanctions that occur on their platforms. In addition, if the control of the protocol is not clear, any entity that invests more than $25 million in its development will be responsible for meeting this obligation.

Crypto Community Cries: Concerns Over Practicality and Impact

Although the full bill has yet to be published, the proposal has faced significant backlash from the crypto community. Critics argued that the bill imposed impractical requirements on platforms, leading some to compare it to a “de facto ban”. Additionally, there are concerns that bad actors could exploit the regulations, ultimately hindering innovation and development in the crypto space.

Familiar Resemblance: Past Efforts of CANSEE and Senator Elizabeth Warren

Interestingly, the bill bears similarities to an earlier proposal submitted by Senator Elizabeth Warren in March 2022, known as the Enhanced Digital Asset Sanctions Compliance Act. Senators Jack Reed and Mark Warner, who were part of the CANSEE Act, also signed the Warren Bill. Despite these similarities, the official draft of the CANSEE Act is not yet available to the public.

Uncertain Future: Lawmaker Plans and Impact on Crypto Companies

While the CANSEE Act has already been introduced, lawmakers are not planning to work on the bill this year. The lack of clear crypto guidelines and ongoing enforcement actions have made the US a challenging environment for many crypto companies. The introduction of bills like CANSEE adds to the growing anxiety within the crypto industry regarding potential regulatory hurdles.

In conclusion, the introduction of the proposed CANSEE Act has sparked significant controversy within the crypto community, as it raises concerns about its practicality and potential impact on innovation. As lawmakers continue to weigh crypto regulations, finding the delicate balance that ensures investor protection without hindering industry growth remains an important challenge. As the landscape evolves, it is important for stakeholders to work together to create regulations that promote responsible growth and foster a vibrant crypto ecosystem.