A group of U.S. Senators have introduced legislation granting the Treasury Department oversight authority for the decentralized finance sector.
The bill, announced July 19 in a press release, would require decentralized finance services to comply with the same anti-money laundering and economic sanctions compliance obligations that traditional banks and centralized cryptocurrency platforms adhere to.The Treasury is currently limited to enforcing that provision on transactions in the traditional banking system.
The bipartisan bill, the Crypto-Asset National Security Enhancement and Enforcement Act, is sponsored by Democrats Jack Reed of Rhode Island and Mark Warner of Virginia; and Republicans Mike Rounds of South Dakota and Mitt Romney of Utah. The Senators said DeFi has been exploited by Chinese chemicals manufacturers, Mexican drug cartels, the North Korean government, cybercriminals and other bad actors to launder money.
Decentralized finance companies are blockchain-based applications that provide financial services directly to consumers and businesses without intermediaries. DeFi is aiming to replace centralized banks with peer-to-peer relationships that can provide everyday services such as banking, loans and mortgages, to asset trading and contractual relationships.
“The CANSEE Act would end special treatment for DeFi by applying the same national security laws that apply to banks and securities brokers, casinos and pawn shops, and even other cryptocurrency companies like centralized trading platforms,” the release stated. “That means DeFi services would be forced to meet basic obligations, most notably to maintain AML programs, conduct due diligence on their customers and report suspicious transactions to FinCEN.”