An anti-money laundering bill before the US Senate and focused in part on digital currencies "could upset years of policy and compliance work", according to Washington, DC, advocacy group Coin Center.
A new blog post penned by Coin Center executive director Jerry Brito dives into the specifics of the bill, arguing that the Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017 – introduced in late May by a group of influential senators – largely replicates rules put in place by the Financial Crimes Enforcement Network (FinCEN), which first issued guidance on digital currency activities in 2013 and later 2014.
According to Brito, the Senate bill's approach as written is "counterproductive" to its intended goal of countering illegal activities.
He wrote:
"Almost all of the digital currency specific language in the bill is now covered under existing money laundering law, and, if left as drafted, the proposed changes would be counterproductive to combatting money laundering."
In the post, Coin Center takes aim at the addition of "issuer, redeemer, or cashier of ... digital currency ... or any digital exchanger or tumbler of digital currency" to the definition of what constitutes a financial institution under the US Bank Secrecy Act, which was first instituted in the 1970s.
According to Brito, the addition is again redundant in the context of FinCEN rules, "making this section of S. 1241 bill redundant with current law."
"Furthermore, if this language were to remain in S. 1241 it would introduce a lot of confusion by creating new language and categorizations that would now be incompatible with FinCEN's guidance and the years of compliance efforts that have emerged around that guidance," he continued.
A move that would potentially add confusion to the market, Brito argued, could have global implications as well, because the shift "would be counterproductive for international harmonization and cooperation."
Coin Center also honed in on fears that digital currency holdings could be subject to declaration and seizure at the US border, with Brito noting that, at present, the bill calls for a report on how customs agents might approach this process. The measure itself remains in the early stages, being referred to the Senate Judiciary Committee in late May, according to public records.
"Detecting and interdicting such instruments is the kind of thing Congress expects these agencies to be able to do and to be able to explain how they plan to do it, and mandating such a report does not say anything about policy," Brito wrote.