Have you ever heard of the U.S. Senate’s Combating Money Laundering, Terrorist Financing, and Counterfeiting Act of 2017?
Don’t fault yourself if you haven’t; not many have.
But some crypto users are sounding the alarm over the bill right now, and if S.1241 really is as bad as they’re saying it is, you owe it to yourself to understand its legislative ramifications.
We’ve got you covered there.
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What exactly does S.1241 do?
The one sentence summary? S.1241 is designed to “improve the prohibitions on money laundering, and for other purposes.”
So what’s that mean for everyday crypto users?
Well, it’s not exactly clear for now.
The source of the current uproar around S.1241 comes from r/Bitcoin Redditor u/pcvcolin, who delivered an “In Case You Missed It” write-up on October 30th alleging the bill would “require individual users of ‘digital currencies’ to be regulated to the same level as banks” and even freeze bank accounts.
Per u/pcvcolin’s reading of the bill, S.1241 would:
[…] require the DHS to provide, within 18 months of ratification, a report on strategies to detect cryptocurrencies at border crossings, which would be impossible since there is no technology that can do that.
[…] Sec. 13 of S.1241 seeks to define anyone issuing, redeeming, or cashing bitcoin as a financial institution, requiring them to comply with the Bank Secrecy Act, 31 U.S.C. §5312 and requiring INDIVIDUALS AND SMALL BUSINESSES to adopt the same formal reporting procedures as financial institutions for the purpose of reporting suspicious financial transactions
Is the bill that clear-cut though?
While u/pcvcolin made a compelling, if not impassioned, case, others in r/Bitcoin disputed the scope of S.1241.
For instance, self-described attorney u/PhredMoop perused the bill and considered it to be nothing more than routine regulation of financial institutions.
I’ve read this bill twice today. I’m an attorney, and while I don’t have 100% understanding of it, I believe everyone on this thread is over-reacting. This bill addresses several things. First, it governs ‘money services business[es].’ This is defined as a something that ‘operates on behalf of the public.
Do you run your hardware wallet on behalf of the public? no. So what we’re talking about here in the context of crypto are exchanges like Coinbase, Gemini, Kraken, etc. These are already spied on by states. The feds are just catching up.
That gets us to the rest of the bill and why the feds want to spy, and that’s to do the same thing they do with normal banks, and that’s to stop money laundering. I don’t see anything in this bill that says you can’t own any crypto you want
So the bill could be a major new burden for crypto users, or just the latest regulatory hurdle facing U.S. crypto exchanges. The difference is huge.
When did the bill first appear?
S.1241 was first put forth back on May 25th, 2017, in the U.S. Senate Judiciary Committee by Judiciary Chairman Sen. Chuck Grassley (R-IA).
Sen. Grassley’s co-sponsors were:
- Sen. Diane Feinstein (D-CA)
- Sen. John Cornyn (R-TX)
- Sen. Sheldon Whitehouse (D-RI)
- Sen. Orrin Hatch (R-UT)
- Sen. Amy Klobuchar (D-MN)
While the bill first appeared back in May, u/pcvcolin billed his latest warning post as an “In Case You Missed It” piece, as himself and many later commenters in the thread described having never heard of the bill before.
What’s the status of the bill right now?
So far, the bill has only been introduced. That essentially means absolutely nothing’s happened after the legislation was first brought up in the Senate Judiciary Committee.
From here, S.1241 would need to pass the Senate, then the House, and then a presidential veto to become the law of the land.
In the immediate future, then, it looks like U.S. crypto users have no need to panic.
But if you don’t feel like taking any chances and you’d like to contact your local Congressional representatives, don’t miss this opportunity to message them through https://democracy.io/ and let them know where you stand on S.1241.
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