London Daily

Focus on the big picture.
Friday, Sep 11, 2026

Elizabeth Warren’s new crypto bill sent shockwaves through the industry. Here’s what it could mean

Elizabeth Warren’s new crypto bill sent shockwaves through the industry. Here’s what it could mean

The money laundering-focused legislation could change the entire ecosystem.

On Dec. 14, as the Senate Banking Committee held a hearing on the collapse of FTX, Sen. Elizabeth Warren (D-Mass.) was late to take her seat.

As one of the highest-profile members of the committee—and an outspoken critic of crypto—it seemed unlikely she would miss the event, with witnesses including celebrity investor Kevin O’Leary and TV-star-turned-crypto-critic Ben McKenzie.

A flurry of legislative activity may have caused her delay. Earlier that day, Warren introduced a bill with Sen. Roger Marshall (R-Kans.) called the “Digital Asset Anti-Money Laundering Act of 2022,” which aims to increase financial requirements for crypto.

When Warren eventually took her seat at the hearing, her remarks were not about FTX, but instead the focus of her bill: the ways that crypto facilitates global crime.

“Crypto has become the preferred tool for terrorists, for ransomware gangs, for drug dealers, or rogue states that want to launder money,” she said.

Her bill drew immediate pushback from the industry, with the think tank Coin Center publishing a rebuttal describing it as “the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we’ve yet seen.”

“Through our entire financial system, we operate on a principle that says: same kind of transaction, same kind of risks, same set of rules,” a Warren spokesperson told Fortune. “There is no reason that cryptocurrencies should be held to a lower standard that creates loopholes for criminals to launder money and finance terrorism.”

The crux of the bill brings know-your-customer rules to different players in the ecosystem—including wallet providers, miners, and node operators—and prohibits financial institutions from using privacy tools such as Tornado Cash and Monero.

Patrick Daugherty a lawyer who directs the digital assets and Web3 practice at Foley & Lardner, and teaches at Cornell Law School, discussed the pros and cons of the bill with Fortune.

On the positive side, it empowers federal financial regulatory agencies including the Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission to audit “money services businesses” for compliance.

Given the failure of FTX, Daugherty described this as the “one correct step to make,” just as the Bernie Madoff scandal created a new unit within the SEC to audit investment advisers.

On the negative side, Daugherty said that the bill overreaches in its definition of what constitutes a “money service business.” For Warren and Marshall, this could include miners, validators, and even wallet providers. As Daugherty pointed out, that could mean hardware manufacturers like Ledger.

Under the bill, these entities would have to identify customers and track their transactions, ensuring their compliance with anti-money laundering programs.

For Daugherty, banning privacy tools is a mixed bag. After the Treasury Department’s crackdown on Tornado Cash in August, regulatory clarity is desperately needed, but a total prohibition may go too far.


What’s the opposition?

Warren has long been a bogeyman for the crypto industry. Her recent bill isn’t even the first this year seeking to crack down on crypto’s role in money laundering. In March, she introduced a bill aimed at bolstering sanctions against Russia through imposing restrictions on the broader crypto ecosystem, which critics similarly called an overreach.

Coin Center’s Peter Van Valkenburgh described the recent bill as unconstitutional in two regards. The anti-privacy measures, he wrote, would violate the First Amendment by making it impossible for users to make anonymous payments, including political donations. And the bill may be deemed unconstitutional under the Fourth Amendment by “deputizing” software developers and miners to collect and report private information with a warrant.

In the bigger picture, the bill repudiates many of the core tenets of cryptocurrency—reducing the privacy elements of the ecosystem and treating its “decentralized” participants, such as miners and node operators, as centralized figures responsible for a network’s actions.

As Daugherty told Fortune, these elements of the bill could be viewed as either a bug or a feature.

“If you don't trust crypto assets at all, or if you have some philosophical opposition to them," he said, “then you will probably regard these as features.”


What's the upside?

Hilary Allen, a law professor at American University and one of the witnesses at the Senate Banking hearing last week, said that the bill closes loopholes created by crypto.

“There’s this sense in the space that technology is entirely detached from any human activity,” she told Fortune. “Software is written by people, and technology is administered by people.”

Even though advocates may argue that participants like wallet providers and validators aren't linked to transactions, Allen said they shouldn't be exempt from money laundering laws.

“If you create a technology loophole in the law, then everybody will exploit that loophole,” she added.

Allen's views reflect a skepticism that groups within the crypto ecosystem are truly decentralized—some miners, for instance, are large companies.

Crypto skeptics in Congress have said they want to ensure crypto doesn’t become intertwined with the traditional financial system, a trend that has already begun with institutions like BNY Mellon moving into the space. Allen said strict anti-money laundering laws imposed on the broader crypto ecosystem could keep it separated from traditional finance.


What about legal challenges?

“It’s unsurprising that the crypto industry is making meritless legal arguments to deflect responsibility to follow common sense anti-money laundering rules,” said the Warren spokesperson.

Allen similarly described Coin Center’s argument as “self-serving,” but there is still the open question of what would happen if the bill became law and was challenged in the court system.

With the Supreme Court’s rightward shift, there is a heavy cloud hanging over the administrative state. In this year’s landmark West Virginia v. Enviromental Protection Agency case, the Supreme Court restricted the ability of federal agencies to regulate based on congressional authorization.

If the digital assets bill became law, it would be an actual statute, not just agency action. Even so, as Allen told Fortune, the agencies would have to engage in interpretation to implement the law, which would likely end up challenged in court.


What's next?

Warren and Marshall introduced the bill into the Senate Banking Committee with the intention to re-introduce the bill during the next congressional session beginning in January.

“Senator Warren will continue working in the next Congress to pass this bipartisan legislation into law,” said the Warren spokesperson.

The bill will join a crowded field of crypto legislation. Rather than putting investor protection against free market ideals, Allen said the bill could draw bipartisan support by focusing on national security. She described it as “low-hanging fruit.”

“It’s allowed common cause to be made here,” she told Fortune.

Newsletter

Related Articles

0:00
0:00
Close
English Councils to Gain Power to Introduce Tourist Taxes by 2028
Kemi Badenoch Reshuffles Conservative Shadow Cabinet
Firefighters Make Progress Containing Major Wildfires in South Wales
John Lewis Partnership Reports £124 Million Loss
Study Says UK AI Data Centres Will Create Only a Quarter of Forecast Jobs
UK Government Considers Higher Industrial Water Prices Amid Supply Pressures
Andy Burnham Holds First Call With Donald Trump as UK Prime Minister
NHS Records Busiest Summer on Record as Heatwaves Drive Hospital Admissions
Home Secretary Orders Police Crackdown on Far-Right Anti-Migrant Vigilantes
UK Supreme Court Rules Northern Ireland Religious Education Curriculum Breaches Human Rights Standards
Markets Price in Four Bank of England Rate Rises by Next Summer
House of Commons Prepares Free Vote on Assisted Dying Bill
UK Government Bans Trade With Israeli Settlements in Occupied Territories
UK Economy Grows 0.4% in July as Artificial Intelligence Investment Supports Expansion
Andy Burnham Becomes UK Prime Minister After Keir Starmer Resigns
John Lewis Partnership Loss Widens to £124 Million
UK Government to Put White Working-Class Social Mobility at Centre of Equality Policy
McLaren Plans £450 Million Technology Investment Creating 1,000 UK Jobs
UK Chancellor Faces Calls for Wealth Taxes and Public Ownership in Autumn Budget
English Mayors to Gain Powers to Impose Uncapped Overnight Tourist Taxes
JPMorgan’s Jamie Dimon Warns UK Government Against Bank Windfall Taxes
UK Air Traffic Control Outage Cancels More Than 2,000 Flights
UK Imposes Trade Ban on Israeli Settlements in the West Bank
UK Borrowing Costs Surge as Middle East Tensions Push Long-Term Gilt Yields to Highest Since 1998
Buckingham Palace Says Prince Harry and Meghan Will Not Resume Official Royal Duties
UK Treasury Faces Calls to Scrap £100,000 Childcare Support Threshold
Trades Union Congress Urges Labour Government to Rewrite Migration Policy
Riot Police Deployed After Anti-Migrant Protests Turn Violent in Portsmouth
UK Considers Replacing Some Disability Cash Payments With Direct Services
JPMorgan’s Jamie Dimon Warns UK Chancellor Against Higher Banking Taxes
UK Announces New Sanctions Targeting Israeli Settlements in West Bank
Metropolitan Police Investigate Alleged Illegal Donations to Reform UK
UK Charges Wiltshire Man With Assisting Russian Intelligence
UK Orders Urgent Review After Air Traffic Failure Cancels More Than 2,000 Flights
Merz Rebukes AfD Expansion in Saxony-Anhalt
King Charles Confirms Prince Harry and Meghan Will Remain Private Citizens
Labour Selects Former Child Refugee for By-Election in Keir Starmer’s Former Seat
Foreign Private Equity Accelerates Takeovers of London-Listed Industrial Companies
NHS Maternity Care Faces Scrutiny Over Support for Mothers After Caesarean Births
BBC Warns Staff Strikes Are Likely Amid Job Cuts and Programme Cancellations
English Housing Affordability Improves to Best Level in More Than a Decade
UK Health Commission Proposes Framework for Wider AI Adoption Across NHS
Labour Faces Pressure for Wealth Tax Ahead of Autumn Budget
Metropolitan Police Open Criminal Investigation Into Alleged Foreign Donations to Reform UK
UK Police Deploy Riot Officers After Anti-Immigration Unrest in Portsmouth and Dover
UK Defends Sanctions on Israeli Settlements Despite Diplomatic Retaliation
UK Air Traffic Control Failure Cancels More Than 1,000 Flights and Disrupts 65,000 Passengers
Compass Urges £10 Million Wealth Tax and Public Ownership Ahead of UK Autumn Budget
UK Government’s Devolution Plans Face House of Lords Scrutiny
Maldives Seeks New Chagos Sovereignty Talks With UK Prime Minister Andy Burnham
×