London Daily

Focus on the big picture.
Sunday, Aug 09, 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
Jorge Messi, Lionel Messi’s Father and Longtime Agent, Dies at 68
AI’s Next Bottleneck Is Power, Not Just Nvidia Chips
Nvidia Turned Gaming Chips Into the Engine of the AI Boom
Advertising trick: Pepsi’s Harrier Jet Commercial Led to a $700,000 Court Fight
Joe Biden’s Cancer Has Spread Beyond His Bones, Hunter Biden Says
Air Traffic Control Outage Grounded Flights Across the Midwest
Why 2027 Could Be a Strong Year for Stocks—and Why the Forecast Is Fragile
Why Markets May Look Quiet in August After Big Tech Earnings
Partial Solar Eclipse Expected to Draw Interest Across Southwestern UK
UK Graduate Job Postings Fall 7% as Entry-Level Opportunities Remain Scarce
UK Private Sector Returns to Growth as July Activity Reaches Highest Level Since April
UK Summer Drought and Wildfires Raise Pressure for Stronger Environmental Measures
UK Household Credit Stress Rises as Credit Card Lending Growth Hits 12.5%
London Stock Exchange Revises AIM Rules to Make Growth Capital More Accessible
NHS England to Expand Mental Health Services With 155 New and Upgraded Facilities
UK Overhauls £90 Billion Public Procurement System to Reward Domestic Jobs and Apprenticeships
Andy Burnham Holds Strong Approval as Labour Maintains Narrow Lead Over Reform UK, Opinium Finds
Royal Navy Monitored Russian Warships and Shadow Fleet Tankers for 21 Days in July
Australian Crew Evacuates Seriously Ill American From Antarctica in Midwinter Darkness
Trump’s Top General Seeks an Exit Strategy From Iran War, Report Says
Brock Lesnar Retires From Wrestling, Closing a Career of Rare Athletic Range and Lasting Controversy
Welsh First Minister Raises Independence With UK Prime Minister in First High-Level Call
UK Maintains Severe Terror Threat Level as Prevent Report Highlights Online Radicalization
YouGov Poll Shows Labour Favourability Improves as Reform UK and Greens Lose Ground
Brexit Campaigner Arron Banks Admits Hiring Private Investigator to Examine Journalist
Robert Jenrick Leaves Conservatives for Reform UK in Major Parliamentary Defection
July 2026 Was England and Wales’ Driest Month on Record, Met Office Says
UK Government Considers Public Inquiry Into Jeffrey Epstein’s UK Connections
Trump-Era Policy Shifts Test the Boundaries of U.S. Institutions
UK Drought Cuts Harvests and Raises Food-Security Fears
UFO: Pentagon Releases Video of Unidentified Object Tracked Over Middle East
US Health Secretary: “I’m Not Afraid of Germs — I Used to Snort Cocaine Off Toilet Seats”
Ukraine Tells Senate Republicans Its Drone War Offers a Blueprint for America
Weight-Loss Drug Boom Tests the Limits of Prescription Advertising Rules
Trump Keeps Hegseth at Pentagon While Leaving Door Open for DeSantis
UK Clears Paramount’s Warner Bros. Discovery Deal, but US Trial Looms
UK Prosecutors Add 38 Charges Against Andrew and Tristan Tate
Taiwan’s President Joins Wartime Command Drill as China Pressure Grows
Saudi Arabia, Turkey and Pakistan Sign Mutual-Defence Pact
Government Orders Review of Prison Release Rules After Concerns Over Grooming Gang Offenders
Rail Disruption Continues Across North-West England Amid Infrastructure Problems and Engineering Closures
UK Tax Authority Proposes Broad Changes to Rules Governing Company Distributions
UK Government Moves to Protect Standing Areas Outside Pubs From Local Restrictions
Extreme Right-Wing Referrals Under UK Prevent Programme Rise 42 Percent
EU Citizens in UK Warned That Some Residency Rights May Have Been Granted in Error
Every Monitored Body of Water in England Fails Chemical Purity Standards, Government Data Shows
UK Scientists Create First Artificial Intelligence-Designed Viruses
England Orders Primary Schools to Identify Children at Risk of Becoming Disengaged From Education or Work
Government Moves to Close Prison Release Loophole Amid Concern Over Grooming Gang Offenders
UK Economy Shows Modest Growth Despite Energy Volatility and Global Supply Pressures
×