Senator Elizabeth Warren criticized the push for a stablecoin bill without anti-money laundering laws, citing national security concerns in a letter to House Financial Service Committee Chairman Patrick McHenry and Ranking Member Maxine Waters. Warren argued that creating new regulatory frameworks for stablecoins could amplify and entrench risks they pose to the American banking sector, including threats to consumers, the banking system, payment system destabilization, and national security risks. She emphasized the importance of strong rules to ensure safety and soundness before integrating stablecoins into the formal banking system or extending safety net protections to stablecoin issuers.
The news of Warren’s letter follows McHenry’s yet-to-be-passed “Clarity for Payment Stablecoins Act,” which aims to increase regulation on stablecoin cryptocurrencies, similar to traditional financial institutions. Warren pushed for the passage of the Digital Assets Anti-Money Laundering Act (DAAMLA) during a Senate hearing, claiming that the U.S. lacks the necessary anti-money laundering laws for advancing stablecoin regulation efforts. She highlighted the need for regulatory frameworks to prevent opportunities for illicit finance, terrorism, sanctions evasion, and money laundering in the crypto industry.
Warren has been a staunch anti-crypto advocate and drafted DAAMLA in 2022 to enforce stringent oversight rules on key players in the crypto industry, such as miners, validators, and providers. During a Senate hearing, she expressed concerns about cryptocurrencies being used by bad actors to move money around, emphasizing the importance of regulating the industry to prevent financial crimes. Warren’s letter to Waters and McHenry reflects her determination to regulate crypto, but it remains uncertain whether there is consensus among lawmakers regarding stablecoin legislation.
Jeremy Allaire, Circle CEO and longtime stablecoin legislation advocate, believes there is a good chance that stablecoin legislation will be passed in 2024. Allaire expressed optimism about the momentum and potential for stablecoin regulation to become law this year. While Warren’s letter signals her commitment to regulate crypto, the level of agreement among legislators on stablecoin legislation is still unclear. The debate over the need for anti-money laundering laws to accompany stablecoin regulation highlights the importance of addressing national security risks and ensuring the safety and soundness of the financial system.
