Senators Warn Crypto Bill Could Weaken U.S. Anti-Money Laundering Laws
Senior members of the Senate Judiciary Committee are warning that a proposed crypto market structure bill could severely undermine...
Quick overview
- Senior Senate Judiciary Committee members warn that a proposed crypto market structure bill could weaken efforts against money laundering and financial crime.
- The bill's provision allowing certain blockchain developers to bypass financial licensing may create significant loopholes in financial crime laws.
- Judiciary leaders express concern that the lack of oversight could hinder accountability for financial crimes, potentially benefiting organized crime.
- Legal experts highlight that the proposed exemptions could complicate prosecutions, as seen in the Tornado Cash case, which involved significant money laundering activities.
Senior members of the Senate Judiciary Committee are warning that a proposed crypto market structure bill could severely undermine the federal government’s efforts to take down money launderers and other financial criminals. In a private letter, Judiciary leaders, including Chuck Grassley and Dick Durbin let Senate Banking Chair Tim Scott and ranking member Elizabeth Warren know that a key provision looks like it might let law enforcement’s authority get watered down by basically giving some money laundering suspects special treatment without any real oversight.
This letter was sent by Grassley and Durbin to Scott and Warren and they pointed out, not so subtly, that since Section 604 of the bill actually falls under the Judiciary Committee’s umbrella, it’s pretty strange that no one from the committee got a heads up before the bill went ahead.
Grassley and Durbin are warning that, by basically letting certain blockchain software developers skip out on financial licensing, the bill could create some huge unintended holes in our financial crime laws. At the same time, its not like we need more of that – with financial crimes moving rapidly online, and into digital and decentralised systems.
Developer Exemptions are Bugging Legal Experts
At the heart of the disagreement is the bit of language that would actually give certain blockchain software developers a free pass on financial licensing requirements. Supporters say its all about protecting innovation – making sure coders aren’t treated like some kind of financial middlemen. But Judiciary leaders say this is all a bit too broad and could be used to hide people who are actually playing a major role in helping to launder money.
🇺🇸 U.S. Senate cancels its vote on the crypto market structure bill
COINBASE SAYS IT CAN’T BACK THE SENATE BANKING CRYPTO DRAFT.
Claims it risks “A DE FACTO BAN” on tokenized stocks, hits DeFi privacy, weakens CFTC vs SEC & could kill stablecoin rewards.
NO BILL > BAD BILL 💥 pic.twitter.com/3antyA32k0
— Money Ape (@TheMoneyApe) January 15, 2026
The provision is suspiciously similar to the Blockchain Regulatory Certainty Act – that was sponsored by Cynthia Lummis and Ron Wyden. But critics say the current language lacks some pretty crucial limits.
According to Grassley and Durbin, all of this could make it a lot harder to actually hold people accountable for any financial crimes they’ve committed. And that makes the whole thing look a lot more attractive to organised crime, including drug cartels and these big money laundering networks that operate all over the world.
Tornado Cash Case Shows Us the Prosecution Risks
The senators pointed to the Tornado Cash case as a clear example of exactly what might go wrong here. Prosecutors said the platform was being used to launder huge sums of cash that was earned illegally. One of the co-founders was actually convicted last year for basically operating an unlicensed money transmitting business.
https://www.politico.com/f/?id=0000019b-c7e8-dd3c-a5df-effa74800000/
Grassley and Durbin are saying the proposed exemption could have actually prevented prosecutors from bringing that case in the first place. And law enforcement groups agree, saying the bill could make it a lot harder for them to actually go after people who are committing financial crimes using these new technologies.
The main risks as far as prosecutors are concerned are:
- Being unable to charge these crypto facilitators who are doing all this illicit stuff.
- People making a lot more use of these decentralised platforms that are so hard to regulate.
- Having basically zero oversight over all these unlicensed fund flows.
The National Association of Assistant U.S. Attorneys is actually saying that the provision could “pretty much bring the whole thing crashing down” when it comes to financial crime prosecutions – and that’s just ratcheting up the argument between those who just want to let financial innovation run wild and those of us who are worried about enforcing our laws.
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