The U.S. Senate has proposed a new bill aiming to increase oversight and regulations for decentralized finance (DeFi) platforms. If passed, the Crypto-Asset National Security Enhancement Act of 2023 would impose strict anti-money laundering (AML) and know-your-customer(KYC) rules on DeFi protocols.
The bill seeks to treat DeFi protocols like traditional financial institutions by requiring them to:
- Conduct customer verification and identification
- Implement risk-based AML programs
- Report suspicious transactions to regulators
- Block access to sanctioned individuals
Entities investing more than $25 million in DeFi platforms would take on responsibility for meeting these regulatory requirements.
Regulators see DeFi platforms as a potential threat due to their pseudonymous nature and lack of controls. Securities and Exchange Commission (SEC) Chair Gary Gensler has emphasized that
“just because a trading platform calls itself ‘decentralized’ doesn’t mean that the Securities Act doesn’t apply.”
If passed, this bill would give the Treasury Department expanded authority to monitor crypto assets and platforms for illegal activities. It would also mandate identity verification for crypto kiosks and ATMs.
Proponents of the bill argue that increased regulations are needed to reduce the risk of DeFi being used for illicit activities like money laundering and tax evasion. Critics, however, say that overregulation could stifle innovation in the DeFi space.
The bill marks a significant step by lawmakers towards applying traditional financial regulations to the emerging DeFi sector. How regulators and the crypto industry balance oversight with innovation will be critical for the future development of DeFi.
This article is based on the original news published on CryptoNews.
Disclaimer: This news article is for informational purposes only and does not constitute financial or legal advice. It is important to conduct through research and consult with professionals before engaging in any investment or financial activities.