United States Senator Jack Reed has backed a bill which aims to tighten Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations for decentralized finance (DeFi). The main purpose of the proposed bill is to prevent scams and establish a safer environment for the crypto community. The bill is also known as the Crypto Asset National Security Enhancement and Enforcement (CANSEE) Act . It was submitted to the Senate on July 18.
Extending Regulations to DeFi
Reed’s bill is looking to subject DeFi operations to the same regulatory requirements as centralized crypto trading platforms and other financial institutions . The bill places responsibility on “anyone controlling the project” for the use of DeFi services by individuals under sanctions. In the event that a DeFi service lacks centralized control the CANSEE Act proposes that individuals who invest more than $25 million into the project would carry the responsibility for fulfilling these regulatory obligations . By placing accountability on significant investors the bill is actively trying to discourage illicit activities and promote responsible usage of DeFi services.
Modernizing AML Powers and Addressing Crypto Kiosks
The CANSEE Act also seeks to reform the Treasury Department’s anti-money laundering authorities by broadening its limits beyond the traditional financial sector. This growth is critical in preventing unlawful financial activity made possible by new technologies such as bitcoin . Ultimately it allows for alternate means of conducting transactions outside of the banking sector.
Furthermore the measure adds new restrictions for operators of crypto kiosks or ATMs to prohibit their use for money laundering. Kiosk operators will be enforced to verify both parties participating in a transaction to increase the system’s overall security and integrity.
Bill’s Release and Response from Crypto Community
A specific date for its publication remains unknown. However a draft version claiming to be the proposed legislation has surfaced on GitHub . Following its circulation the bill faced rapid criticism from the crypto community and many individuals from the community expressed their concerns and opposition.