• Bipartisan lawmakers have proposed a new bill, the CANSEE Act, to bring DeFi into compliance with anti-money laundering rules.
• The bill has received pushback from the crypto community as it places impractical requirements on DeFi protocols and platforms.
• If passed, malicious actors like the North Korean state-sponsored Lazarus group could take advantage of these regulations.
Introduction
A bipartisan group of lawmakers in the United States has proposed new rules to regulate DeFi through the Crypto-Asset National Security Enhancement and Enforcement (CANSEE) Act. This bill has been met with significant criticism from the crypto community due to its impractical requirements on these protocols and platforms. If implemented, malicious actors like the North Korean state-sponsored Lazarus group could take advantage of this regulation.
Details of CANSEE Act
The proposed rule would require DeFi protocols and platforms that provide access to them, such as decentralized exchanges and wallet providers, to comply with anti-money laundering (AML) rules or else be held accountable for any breaches. Additionally, if control over a protocol cannot be established clearly, anyone investing more than $25 million into developing it will become responsible for their obligations under this act.
Criticism from Crypto Community
ConsenSys lawyer Bill Hughes describes CANSEE as “a doozy” due to its impractical requirements on these platforms which he deems akin to a “de facto ban” on them. He further cautions that if enough support is gathered for such a bill, its implementation may very well become a reality.
Impact of CANSEE Act
If successfully implemented, the CANSEE Act would have far reaching implications on investors in DeFi projects due to its stringent compliance regulations placed upon them that could lead to possible losses incurred by their investments if found guilty of breaching AML rules or sanctions regulations. Furthermore, malicious actors like North Korean state-sponsored Lazarus group can also benefit significantly from such regulations with their activities going unchecked due to lack of awareness by authorities about their operations within these protocols and platforms.
Conclusion
The introduction of regulations surrounding cryptocurrencies is inevitable considering its rapid growth in recent years however it must be done carefully so as not hinder innovation while ensuring investor protection at all times as well adhering international laws regarding money laundering activities and sanctions violations .
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