back to article Anti-money laundering bill targeting cryptocurrency introduced in US Senate

A bipartisan bill introduced in the US Senate could finally bring the cryptocurrency industry to heel by, among other things, extending existing banking regulations to cover digital currencies and designating cryptocash sellers as money service businesses.  The Digital Asset Anti-Money Laundering (DAAML) Act [PDF] was …

  1. Anonymous Coward
    Anonymous Coward

    Best of luck

    In addition to the fight to get this passed, the attempt to regulate non-exchange hosted wallets is technically difficult(basically impossible) to enforce in any comprehensive way. I expect this is just a tissue thin cover to justify civil asset seizures whenever the police find a paper or offline wallet in someone's possession during a search.

    It's pretty much impossible to force one of the cryptocurrency networks to comply with this across the board though. So the Fed can't touch the majority of actual network traffic, and can't do squat without access to the keys and passwords anyway. They can ruin your life of course, but they can't grab your coins without your keys, or really stop you from transferring it wherever you want as long as you control the keys. Of course this will jam up the exchanges where people change regular money for cryptocurrency, but laws for that were already on the books.

    Parts of this are probably progress for the parts of the scene that want to be legit, and gain access to the broader world baking system. And the cowboys and criminals DGAF and will do whatever they want regardless.

  2. elsergiovolador Silver badge

    Little people

    "Rogue nations, oligarchs, drug lords, and human traffickers are using digital assets to launder billions in stolen funds, evade sanctions, and finance terrorism," Warren said.

    And they will continue to do so regardless of any regulation.

    This is more about getting a tight grip on the necks of little people.

    They need to know where people have any money hidden, so that they can seize it and spend it.

    The class of billionaires that is behind all those concerned politicians don't want competition.

    1. Anonymous Coward
      Anonymous Coward

      Re: Little people

      The idea is to make it much harder for people to launder money in this way. They keep fining banks for ignoring the rules and accepting bin bags full of cash without doing checks. AIUI this bill will give the regulators the ability to fine companies for doing the same thing which they can’t at the moment. Regulation is well overdue given the amounts lost through dodgy companies, dodgy ‘currencies’, dodgy people etc.

      Yes people will still launder money and you won’t be able to totally eliminate this. Banking secrecy in certain jurisdictions also makes it easier to launder money. For example large banks correspondence banking with small offshore banks in the Caribbean helps facilitate this. Anything that makes it harder to launder money can only be a good thing.

      That’s before you get into whether Cryptocurrencies are Ponzi schemes etc.

      1. elsergiovolador Silver badge

        Re: Little people

        It's a classic example of "let's do something". There are better ways to look whether someone or an organisation is laundering money. They just don't want to do it, because it will force them to take down organisations or individuals they don't want to take down.

        1. JimboSmith Silver badge

          Re: Little people

          Well 100% of something is better than 100% of nothing I suppose. If the regulators don’t have the powers they can’t do anything to curb or try to stop things. I assume the other person was referring to this: Huge NatWest Money Laundering Fine when they talked about bin bags. They did do checks and had systems in place to flag up large deposits and suspicious transactions. They stopped doing the checks and disabled the alarms when they were too frequent.

      2. zuckzuckgo Silver badge

        Re: Little people

        I agree that some form of oversight is overdue.

        However, regulating digital currency like real currency and exchanges like banks means when things go tits up, and they still will, the government as the regulating body could be on the hook for bailouts for those to-big-to-fail (or political connected) organizations that jump into crypto once it has the government blessing.

        I think that digital currency should be treated like stocks or commodities as these are expected to be more volatile and more person risk is assumed.

  3. johnrobyclayton

    At last a little bit of competence


    In a summary of the bill, Senator Marshall's office said unhosted crypto wallets, meaning any that are controlled by an individual – such as cold storage on a flash drive, or in an offline wallet – are a serious regulatory gap that needs closing.

    Such wallets "allow individuals to bypass AML and sanctions checks," the pair said in the summary, and the bill takes action to ensure such wallets aren't black holes for regulators.


    The only way to be safe when using cryptographic wallets is to start with personally managing your own wallet. That is just a start though.

    This is the most significant part of the legislation. Everything else they have thought of trying is a bit silly.

    Digital currency and blockchain do not in and of themselves provide anonymity.

    There is a way to be anonymous though.

    Use one time spending wallets.

    If you have some digital currency and want to spend it.

    Create a new wallet.

    Transfer the value you want to spend into the new wallet.

    Transfer the whole wallet to the entity that you are paying.

    The payee then receives the value by creating their own new wallet and transferring the value from the spending wallet to the receiving wallet.

    The payee can then store the receiving wallet until they need to spend something.

    If the value in the receiving wallet is the same they want to spend then they just pass the receiving wallet to the new payee.

    If the amount to spend is greater that what they have in one spending wallet they they can transfer a number of spending wallets to the new payee.

    If its less then they can create new spending wallets and transfer the appropriate amount of value to the new spending wallets.

    If everyone does this then there will be no clusters of linked transactions that can be linked together to identify the individuals that are related to the transactions.

    Then there is just wallets being transferred from place to place and each being used only once.

    Value simply gets recorded as going along a single path of wallet to wallet to wallet.

    Anonymity is a bit more fiddly and a bit more work but it is not difficult to do.

    A little bit of competence on behalf of legislators and regulators deserves a little bit of competence right back at them.

    1. Black Label
      Black Helicopters

      Re: At last a little bit of competence

      Do not forget to mix the wallet contents in-between.

  4. Gob Smacked

    Who are thelaunderers...?

    Banks, governments and the rich... And they get slapped with a smallish fine *if* it becomes public.

    So we want to make open source a crime too now?

  5. tmTM

    Death by regulation

    For the legitimate users, the main draw of crypto is the complete lack of regulation.

    If it did exist the opportunity to make money is quite largely curtailed, and what's the point if people aren't making a quick buck?

  6. aks

    The danger of legitimising cryptocurrencies

    Regulating and attempting to control the use of cryptocurrencies leads to them being treated as semi-legitimate.

    They are a simple Ponzi scheme and should be treated as such as they're nothing but vapourware. The fact that they're also being used for criminal activity, including money-laundering and the withholding of information about profit/income to the tax collector is a different issue.

    There's no fool-proof way to control the flow of real (fiat) money in and out of them other than to have *complete* control over the interface between the two. Unlikely to happen.

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