Bill Overview
Title: Digital Asset Anti-Money Laundering Act of 2022
Description: This bill directs specified federal financial agencies to establish rules regarding digital assets. The Financial Crimes Enforcement Network (FinCEN) must establish a rule classifying digital asset wallet providers, cryptocurrency miners, validators, and others as money service businesses. In addition, FinCEN must require U.S. persons to report cryptocurrency transactions through foreign accounts of over $10,000. FinCEN must also require digital asset kiosk owners and administrators to submit and update every three months the physical addresses of the kiosks. The Department of the Treasury must prohibit financial institutions from handling, using, or transacting business with (1) digital asset mixers, privacy coins, and other anonymity-enhancing technologies; and (2) digital assets that have been anonymized by these technologies. Treasury, the Securities and Exchange Commission, and the Commodity Futures Trading Commission must establish risk examination and review processes for anti-money laundering requirements for their respective regulated entities.
Sponsors: Sen. Warren, Elizabeth [D-MA]
Target Audience
Population: People involved in digital asset transactions
Estimated Size: 7000000
- The bill impacts digital asset wallet providers, cryptocurrency miners, validators, and similar entities as it requires their classification as money service businesses.
- It affects U.S. citizens involved in cryptocurrency transactions through foreign accounts, as it mandates reporting transactions exceeding $10,000.
- The bill impacts digital asset kiosk owners and administrators by imposing quarterly reporting requirements on the physical addresses of kiosks.
- Anonymity-focused digital asset mechanisms, such as mixers and privacy coins, will be affected by prohibitions against financial institutions transacting with them, impacting individuals and entities utilizing these technologies.
- The bill impacts the departments responsible for establishing anti-money laundering compliance processes for digital asset transactions, affecting their regulatory activities.
Reasoning
- The policy specifically targets a niche within the larger financial sector, primarily affecting those directly involved in cryptocurrency transactions and related services.
- Given a budget constraint, the number of directly impacted individuals would be a subset of the approximately 7 million Americans involved in digital asset transactions identified in the reasoning provided.
- The policy additional imposes compliance costs which could increase operation costs for smaller enterprises, possibly affecting their viability.
- Individuals using anonymity-focused technologies face more significant restrictions, potentially impacting their perceived digital freedom and security.
Simulated Interviews
Cryptocurrency miner (San Francisco, CA)
Age: 30 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 5/20
Statement of Opinion:
- I'm concerned about the additional compliance requirements.
- This could increase my operating costs significantly.
- I understand the need for regulation, but hope it won't stifle the industry.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 5 | 7 |
| Year 10 | 5 | 7 |
| Year 20 | 6 | 6 |
Financial analyst (New York, NY)
Age: 42 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 12/20
Statement of Opinion:
- This policy provides necessary oversight that could enhance trust in digital assets.
- The transparency it enforces is overall positive for the industry.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Digital asset wallet provider (Austin, TX)
Age: 28 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 3/20
Statement of Opinion:
- The new requirements add a layer of complexity to our business model.
- We might need to hire additional compliance staff to adhere to these rules.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 6 |
| Year 2 | 5 | 6 |
| Year 3 | 5 | 6 |
| Year 5 | 5 | 7 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 7 |
Cryptocurrency trader (Miami, FL)
Age: 35 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 7/20
Statement of Opinion:
- Reporting requirements are a hassle but understandable.
- Some of my trading strategies might suffer due to the increased transparency.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 7 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 7 | 7 |
Regulatory compliance consultant (Chicago, IL)
Age: 60 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 20.0 years
Commonness: 2/20
Statement of Opinion:
- This policy is a good move towards combating financial crimes.
- It will likely increase demand for regulatory consultants like myself.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 8 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 7 |
Graduate student (Boston, MA)
Age: 23 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 2.0 years
Commonness: 11/20
Statement of Opinion:
- This policy could be a significant case study for my research.
- It offers a practical aspect to my studies and future career path.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 6 | 6 |
| Year 5 | 6 | 6 |
| Year 10 | 6 | 6 |
| Year 20 | 6 | 6 |
Privacy advocate (Seattle, WA)
Age: 38 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 4/20
Statement of Opinion:
- I believe this policy is overly restrictive and impacts privacy rights.
- While I understand the intent, the execution feels stifling.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 7 |
| Year 2 | 5 | 8 |
| Year 3 | 6 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 7 | 8 |
| Year 20 | 6 | 8 |
Digital asset kiosk owner (Dallas, TX)
Age: 50 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Frequent address updates seem manageable but might increase operational costs.
- I hope it helps in reducing crime without affecting legitimate businesses.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 8 |
| Year 3 | 7 | 8 |
| Year 5 | 6 | 8 |
| Year 10 | 6 | 7 |
| Year 20 | 6 | 6 |
Software developer (Denver, CO)
Age: 45 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 20.0 years
Commonness: 6/20
Statement of Opinion:
- Regulations are necessary for mainstream adoption of digital assets.
- This policy could encourage more institutional investments which is exciting for the industry.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 9 | 8 |
| Year 20 | 8 | 8 |
Educator and public speaker on digital literacy (Portland, OR)
Age: 33 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- This policy offers a lot to discuss in terms of financial literacy and digital security.
- I am hopeful it will promote more informed and responsible use of digital assets.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 8 |
| Year 20 | 7 | 7 |
Cost Estimates
Year 1: $250000000 (Low: $200000000, High: $300000000)
Year 2: $200000000 (Low: $150000000, High: $250000000)
Year 3: $180000000 (Low: $130000000, High: $230000000)
Year 5: $160000000 (Low: $120000000, High: $210000000)
Year 10: $150000000 (Low: $100000000, High: $200000000)
Year 100: $100000000 (Low: $75000000, High: $125000000)
Key Considerations
- The need for comprehensive infrastructure and technology upgrades to manage digital asset compliance.
- Potential resistance or adaptation by businesses impacted by the new regulations, which may affect cost projections.
- The global nature of digital assets that may complicate enforcement and compliance efforts.