The bipartisan Digital Asset Anti-Money Laundering Act, introduced today by Sens. Warren and Marshall, is the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we’ve yet seen. It would force anyone who helps maintain public blockchain infrastructure, either through software development or validating transactions on the network, to register as a Financial Institution (FI). As FIs, they would be obligated to:
- identify and record the personal information of every person who uses their software or sends transactions over their internet-connected computers,
- develop risk-calibrated AML programs that block persons from using their software or network throughput if they suspect those people are moving funds related to crime, and
- file reports about their users without a warrant, government request, or probable cause as the trigger.
Additionally, every FI, including traditional FIs like banks, custodial crypto FIs, and these newly classified crypto infrastructure FIs, would be banned from making any transactions involving privacy tools (e.g. Tornado Cash or similar privacy software) or privacy preserving cryptocurrencies (e.g. Zcash, Monero, etc.), irrespective of any evidence of criminality related to those transactions.