- Coin Center and Blockchain Association denounce CANSEE as “unconstitutional” and harmful to free expression.
- The bipartisan legislation will subject anyone who “controls” a DeFi project to penalties if they do not comply with “basic” anti-money laundering (AML).
- The proposed bill holds developers accountable for criminal activity, raising concerns about stifling innovation.
The crypto industry advocacy bodies, Coin Center and Blockchain Association, have joined forces against Senate’s DeFi bill. The bill dubbed the ‘’Crypto-Asset National Security Enhancement and Enforcement Act (CANSEE)’’ is a bipartisan bill introduced on July 19 by Democratic senators Jack Reed and Mark Warner and Republican senators Mike Rounds and Mitt Romney.
The bipartisan legislation will subject anyone who “controls” a DeFi project to penalties if they do not comply with “basic” anti-money laundering (AML) and financial reporting requirements, which already apply to banks and centralized crypto trading platforms.
However, the matter of who ‘’controls’’ a DeFi service will be solely decided by the Secretary of the Treasury – potentially conferring the department with excess authorities.
As per the July 20 blog post, CoinCenter and its executive director Jerry Brito have criticized the proposal as “messy, arbitrary, and unconstitutional. CoinCenter warned that the bill would extend sanctions penalties and Bank Secrecy Act (BSA) obligations to individual developers. Moreover, the proposed bill vests complete jurisdiction in the Secretary of the Treasury to select the individuals controlling specific protocols, raising fears of government overreach and centralized control over decentralized networks.
Further, Coin Centre described potential overreach, such as possible enforcement against those who publish books containing code. The platform has argued that such a content-based approach, targeting developers and protocol authors, could stifle technological advancement and severely hinder free speech.
Blockchain Association Denounces The New Punitive Measures In The Bill As Redundant
On the other hand, Blockchain Association, a prominent crypto advocacy group, joined the chorus of opposition, releasing their reaction to CANSEE. In its July 19 statement, the advocacy group and its CEO, Kristin Smith, asserted that illegal transactions represented just 0.24% of all crypto transactions in 2022. Further, the association argued that authorities have enough powers to enforce the law.
The group called the bill “unworkable” and “incompatible with digital asset technology” as it acknowledged its support for alternative initiatives to curb illicit behavior like proposed changes to a national defense statute focusing on crypto-related criminal activities.
Kristin Smith, the CEO of the Blockchain Association, stated that federal law enforcement agencies are already equipped with the tools and expertise to combat this “relatively small but important issue.” Ultimately, Smith denounced the new punitive measures in the bill as redundant.
Notably, Natalie Smolenski, a senior fellow at the BTC Policy Institute, echoed these concerns, suggesting that the bill was tantamount to an attempt to “outlaw decentralization.” The heated reaction from the crypto community has sparked a wider discussion on the balance between safeguarding against criminal activities and preserving the innovative potential of DeFi.
The proposed legislation faces significant hurdles, with CoinCenter and the Blockchain Association united against CANSEE. Advocacy groups are gearing up to challenge the bill through grassroots campaigns, public awareness efforts, and lobbying to protect the future of decentralized finance from what they perceive as an existential threat. However, the outcome of this tussle will undoubtedly shape the future landscape of the crypto industry for years to come.
