Elizabeth Warren crypto bill draws criticism and sparks election challenge

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United States Senator Elizabeth Warren, best known in crypto circles for her abject disdain of the blockchain industry, continues to draw fire for her ongoing campaign against digital assets.

In February, a coalition of military and national security professionals cooperating with the Blockchain Association raised concerns about Warren’s proposed crypto legislation.

The senator’s Anti-Money Laundering bill has industry figures troubled, believing it could hinder the pace of blockchain’s development in the U.S. if passed.

In a letter titled “Enacting Proposed Legislation that Threatens Digital Asset Development,” 80 signatories expressed their opinion that Warren’s bill “risks our nation’s strategic advantage, threatens tens of thousands of U.S. jobs, and bears little effect on the illicit actors it targets.”

Cointelegraph spoke to Kristen Smith, CEO of the Blockchain Association, to find out what has happened since its February intervention.

“The letter we sent to Congress on Feb. 13, signed by former military and national security experts, has garnered strong support from both industry leaders and key allies in Congress,” said Smith.

“It’s clear there’s broad consensus on the importance of implementing effective policies to maintain America’s leadership in emerging technology. The industry remains committed to advocating for responsible regulation, aiming to cultivate an environment that encourages innovation and advances our nation’s strategic objectives.”

Unperturbed, Warren continues to advocate anti-crypto policies. In a Feb. 27 Bloomberg interview, the senator claimed she wished to work with the industry while simultaneously smearing it.

“I want to collaborate with the industry,” she said. “What I don’t understand is why the industry seems to be saying that they only way that they can survive is if there’s plenty of space for the drug traffickers and the human traffickers — oh, and the terrorist, and the ransomware scammer and the consumer scammers.”

Warren went on to raise the specter of nuclear weapons and rogue nations.

“North Korea is financing about half of its nuclear missile program with crypto,” she said.

Crypto industry unimpressed

Warren’s tendency to pile the crypto industry in with the lowest dregs of society and villainy has won her few friends in the blockchain space.

Danny Lim, a core contributor at decentralized exchange MarginX, said that Warren’s bill is a prime example of a wasted endeavor.

“The Elizabeth Warren crypto bill embodies a legislative effort expending a 1,000% effort to achieve a 1% outcome,” says Lim.

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According to Lim, Warren’s key mistake is believing regulations intended for the traditional finance world can be lifted and applied to crypto wholesale. As Lim explains, “applying traditional banking methods for monitoring and tracing may prove ineffective.”

“Instead, we should explore more crypto-centric solutions for a meaningful convergence of TradFi and DeFi [decentralized finance]. Implementing generic travel rules and mandatory KYC [Know Your Customer] for on-chain transactions does not sit well with crypto users and the industry as a whole,” said Lim.

Zac Cheah, co-founder and CEO of Pundi X, a blockchain-based point-of-sale solution, echoes Lim’s assessment.

“Simply applying traditional banking regulations to digital assets without adjustments could hinder innovation. To sustain the crypto industry’s growth, it’s vital to push for regulations that tackle money laundering effectively while also being flexible to accommodate digital assets’ unique traits,” Cheah told Cointelegraph.

“We need a regulatory approach that fosters innovation while protecting the financial system from illicit activities,” he concluded.

A new threat for Warren

Until recently, Warren’s attacks on blockchain had few real consequences.

That may be set to change. On Feb. 20, Lawyer and XRP (XRP) advocate John Deaton announced his intention to stand for Senate in Warren’s state of Massachusetts. Deaton’s move for the Senate seat means Warren now faces a direct threat to her power from within the crypto industry.

Prominent members of the cryptocurrency community, like Cardano founder Charles Hoskinson, have already contributed to his campaign.

I just donated the maximum amount allowed for @DeatonforSenate in his fight against Elizabeth Warren for Senate. We need people willing to take on the establishment against banks writing our laws and destroying the Crypto industry. pic.twitter.com/tTxmghBhUH

— Charles Hoskinson (@IOHK_Charles) March 3, 2024

As for Deaton, he cuts a somewhat unlikely political figure. The lawyer is known in the crypto community for advocating for XRP holders, representing their interests against the U.S. Securities and Exchange Commission (SEC).

Originally from Detroit, Michigan, Deaton practices law in New England. His links to the Bay State come from his time studying law in Boston.

Deaton is now renting a property in Massachusetts and has put his Rhode Island residence up for sale. Whether Deaton can unseat Warren or not, it makes a potential headache for the incumbent.

His campaign website states, “John Deaton is a U.S. Marine veteran, cancer survivor, father to three daughters, trial attorney, author and someone who overcame impossible odds to build a life for his family and become a champion for other underdogs.”

A February poll of Boston.com readers suggests Warren may have a challenge on her hands. Of the over 500 respondents, 57% said Warren was vulnerable to Deaton, while 39% said she was too entrenched.

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Deaton’s campaign for the Senate seat also marks another milestone in the arrival of crypto as a political force.

As Blockchain Association’s Smith told Cointelegraph, “We are pleased to see an increasing number of pro-crypto candidates enter the electoral races at various levels of government.”

That’s food for thought for anyone standing on an anti-crypto platform.

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