Bad! US Senate Wants to Control DeFi Like Banks!

<p>&nbsp;"What the hell is this, DeFi firms must be in fear right now?"</p><p><br /></p><p>Unbeknownst to us, the United States (US) Senate plans to regulate the cryptocurrency market through a new bill that will impose strict anti-money laundering (AML) on decentralized finance (DeFi) protocols.</p><p><br /></p><p>Reportedly, the Crypto-Asset National Security Enhancement Act of 2023 which is a bipartisan bill would require DeFi protocols to impose controls on their user base just like banks.</p><p><br /></p><p>So here it can be seen that the bill needs to be applied by anyone who controls the DeFi protocol or provides applications to use the protocol.</p><p><br /></p><p>However if no one controls the DeFi protocol, then as a backstop* those who invested more than $25 million in developing the protocol should also fit the bill.</p><p><br /></p><p><br /></p><p>*A financial arrangement where a secondary source of funds is created if the primary source of funds does not meet the required requirements.</p><p><br /></p><p>As such, all DeFi firms should review and collect information about their customers, maintain an AML program, report suspicious activity to the government and prevent blocked individuals from using their protocol.</p><p><br /></p><p>In addition to wanting to prevent money laundering, the bill also aims to deal with the increase in crypto-facilitated crimes** that can pose various threats to the country.</p><p><br /></p><p>**Criminals use digital technology to launder money, sell drugs or weapons, etc.</p><p><br /></p><p>In context, the DeFi protocol is a financial application that allows anyone with a crypto wallet to borrow or trade digital assets through smart contracts.</p><p><br /></p><p>However, it should be noted that it may be difficult to control compared to centralized crypto exchanges such as Coinbase that can operate directly on the blockchain without requiring any permission.</p>