The US Senate is set to introduce a new bill, the Crypto-Asset National Security Enhancement Act of 2023, which would impose anti-money laundering (AML) requirements on decentralized finance (DeFi) protocols. According to a briefing document, the bill is intended “to fight the rise in crypto-facilitated crime and close off avenues for the evasion of money laundering and sanctions measures that are critical to our national security.”
The bill would require those who “control” a DeFi protocol or make an application to use the protocol to vet and collect information on their customers, maintain anti-money laundering programs, report suspicious activity to the government, and block sanctioned individuals from using their protocol. As a backstop, anyone who invests more than $25 million in developing the protocol will be responsible for these obligations. Additionally, the bill would place identity verification requirements on crypto kiosks and expand the Treasury Department’s authority to police alleged money launderers in non-traditional financial settings, including crypto.
The bill was introduced Wednesday by Sen. Jack Reed (D-R.I.), a member of the Senate Banking Committee, with co-sponsors Mike Rounds (R-S.D.), Mitt Romney (R-UT) and Mark Warner (D-VA). “If nobody controls a DeFi protocol, then—as a backstop—anyone who invests more than $25 million in developing the protocol will be responsible for these obligations,” according to the briefing document.