The Senate Judiciary Committee says existing anti-money laundering (AML) laws need to be modernized.
The bill will amend the definition of ‘financial account’ and ‘financial institution’ to include cryptocurrencies and digital exchanges.
Experts warn that if the law is passed, it will likely have far-reaching effects for digital currencies’ users both in the US and abroad.
“It’s bad… I think it’s going to end in a very confrontational way between bitcoin—even bitcoin holders and users—and the US Government,” said cryptocurrency analyst and a 10-year Wall Street veteran Tone Vays.
The issue of virtual currencies is interesting, according to John A. Cassara, board member of the Foundation for Defense of Democracies.
“I’m just glad I had my career when I did because I don’t know what I’d do trying to follow the money when it comes to digital currencies, it’s extremely, extremely challenging…I think if you look at the metrics, the metrics suggest today [that] digital currencies are a small fraction of the threat that we face...,” he said in his testimony during the bill hearing.
“We’re right at a crossroads, and it’s going to be very, very interesting to see what goes forward,” Cassara added.
According to media reports, the White House has been actively monitoring cryptocurrencies and ramping up regulatory policies toward them. In June, New York Representative Kathleen Rice asked the government to research the role of virtual currencies in terrorism.
The US Securities and Exchange Commission (SEC) has ruled that digital coins and tokens from ICOs are considered securities and must be subject to federal securities laws. That means it will be not as easy for US companies to hold an ICO or for US citizens to participate as they have to be registered and comply with securities laws.