Republican Sen. Tillis Calls for ‘Light’ Crypto Regulatory Framework Ahead of Presidential Election

U.S.
Senator
Thom
Tillis
(R-N.C.)
said
on
Tuesday
that
the
crypto
industry
needs
a
“light”
regulatory
framework
put
in
place
to
both
combat
risks
–
including
another
FTX-like
collapse
and
illicit
terrorism
financing
–
and
create
a
“hospitable
environment”
in
which
digital
assets
can
thrive.

The
remarks
came
during
a
Senate
Banking
Committee
meeting
with
Deputy
Treasury
Secretary
Wally
Adeyemo
on
Tuesday,
who
testified
about
the
Treasury’s
efforts
to
counter
illicit
finance,
terrorism
and
sanctions
evasion.
Adeyemo
also
pressed
the
members
of
the
Committee
for
“additional
tools”
to
fight
crypto
crime,
following

legislative
requests
he
made
last
November.

“One
thing
I’d
tell
people
in
the
crypto
or
digital
assets
space
that
say
‘Nothing
to
see
here,
everything
is
fine’
–
they’re
wrong,”
Sen.
Tillis
said.
“There
needs
to
be
some
light
regulatory
regimen
put
into
place,
otherwise
there
are
risks…We
want
to
create
the
most
hospitable
environment
for
digital
assets
to
thrive.
We
don’t
want
to
overreach
and
lose
the
opportunity
to
be
that
jurisdiction.”

Tillis
added
that
if
there
is
a
change
of
administration
following
the
presidential
election
in
November,
the
view
of
how
to
regulate
crypto
will
be
“vastly
different.”

“I,
for
one,
would
like
to
look
at
the
possibility
of
working
with
[the
Treasury
Department]
to
address
some
of
the
things
in
your
punch
list
that
we
agree
with,
so
that
we
may
be
able
to
get
regulations
on
the
books
in
this
Congress
that
will
certainly
not
go
as
far
some
of
my
colleagues
on
the
other
side
of
the
aisle
want
to
go,
but
[will
be]
far
short
of
the
wild,
wild
West
that
we
find
ourselves
in
now,”
Tillis
said.

On
Monday,
Tillis
and
Sen.
Bill
Hagerty
(R-Tenn.)
released

a
discussion
draft
of
a
new
bill
–
the
Ensuring
Necessary
Financial
Oversight
and
Reporting
of
Cryptocurrency
Ecosystems
(ENFORCE)
Act
–
aimed
at
making
sure
centralized
cryptocurrency
companies
are
adhering
to
Bank
Secrecy
Act
(BSA)
and
anti-money
laundering
(AML)
standards.

Democratic
members
of
the
Senate
Banking
Committee,
including
Sen.
Elizabeth
Warren
(D-Mass.),
Sen.
Mark
Warner
(D-Virginia)
and
Sen.
Bob
Menendez
(D-N.J.)
also
called
for
more
crypto
regulations.

“Name
your
bad
guy,
and
crypto
is
the
way
they
can
move
money
around,”
Sen.
Warren
said.

Warren
added
that
validators
–
which
validate
transactions
on
proof-of-stake
blockchains
–
are
not
subject
to
the
same
anti-money
laundering
(AML)
and
know-your-customer
(KYC)
laws
that
banks
are.

“Stablecoins
make
it
easier
to
convert
dollars
into
crypto
and
crypto
into
dollars,
so
they
are
an
onramp
into
the
crypto
world,”
Warren
said.
“If
we’re
going
to
create
new
onramps…then
we
need
a
regulatory
framework
that
will
put
the
rules
for
anti-money
laundering
into
place
so
that
we
do
not
have
new
opportunities
for
Iran
and
terrorists
and
drug
lords
and
human
traffickers
to
make
more
money.”

Expanded
powers

During
the
hour-long
hearing,
Adeyemo
maintained
that
the
Treasury
needs
expanded
powers
to
effectively
crack
down
on
illicit
crypto
financing.

Adeyemo
told
the
Committee
that,
as
the
Treasury
has
improved
its
ability
to
cut
foreign
enemies
–
including
state
actors
like
Iran,
Russia
and
North
Korea,
as
well
as
terrorist
groups
like
Hamas
and
Al-Qaeda
–
off
from
the
traditional
finance
system,
they
are
increasingly
turning
to
crypto
as
a
workaround.

He
has
asked
Congress
for
three
legislative
reforms.
First,
a
“secondary
sanctions
tool”
against
exchanges
that
facilitate
illicit
finance,
which
would
“help
Treasury
evolve
its
targeting
capabilities.”

Second,
Adeyemo
asked
for
an
expansion
of
the
Treasury’s
reach
to
“explicitly
cover
the
key
players
and
core
activities
of
the
digital
assets
ecosystem.”

Lastly,
he
requested
a
reform
to
address
the
“jurisdictional
risk
from
offshore
cryptocurrency
platforms,”
which
would
allow
the
Treasury
to
“clarify
that
our
authorities
can
reach
extraterritorially
when
digital
asset
entities
harm
our
national
security
while
taking
advantage
of
our
financial
system.”
In
addition
to
countering
illicit
financing,
Adeyemo
added
that
this
reform
would
“
also
promote
a
level
playing
field
for
U.S.-based
VASPs.”