Republican senator Roger Marshall has become the first senator to walk from a controversial crypto bill he initially co-sponsored.
Marshall pulled his support for the Digital Asset Anti-Money Laundering Act of 2023 on Tuesday, legislation records show.
Reintroduced in the Senate on July 27, 2023, by Senator Elizabeth Warren, Marshall, and others, the bill attracted sizeable bipartisan support, with 18 other co-sponsors across party lines.
Crypto has become a political issue in recent months, with former president Donald Trump promising to relax regulations and protect innovation should he secure the White House in November.
President Joe Biden's administration has been criticized for taking a heavy-handed approach to the industry under the leadership of Securities and Exchange Commission Chairman Gary Gensler.
Marshall, who helped introduce the bill a year ago, has been vocal in his criticism against crypto, labeling the asset class as a “threat to national security”, including stablecoin issuer Tether.
In April, Marshall and Warren penned a letter to the Department of Defense claiming a lack of oversight existed in Tether’s role in facilitating rogue nations' attempts to circumvent U.S. sanctions.
It was not immediately clear why the senator had withdrawn as a co-sponsor of the bill. Marshall’s office has yet to return a request for comment.
The legislation claims it will bring the crypto industry into greater compliance with existing anti-money laundering and counter-terrorism financing frameworks.
Specifically, the bill classifies digital asset providers, such as unhosted wallet providers, miners, and validators, as financial institutions subject to Bank Secrecy Act compliance.
It mandates the Financial Crimes Enforcement Network to issue regulations for reporting requirements for significant foreign digital asset holdings.
It also seeks to establish compliance measures for financial institutions to mitigate risks associated with anonymity-enhancing technologies.
Critics of the bill argue it imposes impractical compliance burdens on crypto participants, stifles innovation, and could push activities offshore.
They also highlight privacy concerns, economic impacts, and potential unintended consequences, including driving users to unregulated platforms, undermining the bill's intent to bolster security.