• The Crypto-Asset National Security Enhancement (CANSEE) Act was introduced earlier this week by a bipartisan group of senators.
• The advocacy group Coin Center has voiced objections to the bill, claiming that it would violate the First Amendment and stifle innovation in the United States.
• In a blog post, CEO Jerry Brito called CANSEE a messy, arbitrary, and unconstitutional approach to DeFi.
A bipartisan legislation titled the Crypto-Asset National Security Enhancement (CANSEE) Act was introduced earlier this week that seeks to regulate the decentralized finance (DeFi) sector. This has caused quite a stir as cypto advocacy groups are voicing objection to the bill arguing that such an approach would stifle innovation in the United States.
Coin Center’s Objection
The crypto think tank Coin Center lashed out at the bill and called it a messy, arbitrary, and unconstitutional approach to DeFi. In a blog post , its CEO Jerry Brito slammed the bill introduced by Senators Reed, Rounds, Warner, and Romney for lack of inputs from industry stakeholders. He explained that if passed, it would extend penalties to anyone who develops or uses crypto protocols deemed risky or unlawful in nature without due process of law violating freedom of speech protected by First Amendment.
CANSEE Bill’s Aim
The goal of CANSEE is to tackle money laundering violations in DeFi but legal experts remain skeptical about its implementation citing potential constitutional violations. It proposes three new regulations including registration requirements for all developers using “high risk” protocols like Uniswap or Aave; reporting obligations for issuers of digital tokens with more than 10 million holders; and authorization requirements for any U.S.-based provider offering services related to cryptocurrencies deemed “unlawful” by FinCEN or other federal agencies.
Implications on Innovation
Critics have argued that imposing these stringent rules will create an environment where innovators are scared away from developing projects in fear of criminal liability if they fail to comply with registration or reporting obligations set forth by CANSEE Act further suppressing growth potentials for blockchain projects developed within U.S jurisdiction. Furthermore, companies may also need additional resources for compliance which can be cost prohibitive for smaller startups leading them away from U.S market altogether while hampering job creation opportunities at home as well as economic growth opportunities through emerging technologies like blockchain-based financial systems which offer efficient alternatives for traditional banking services such as payments and lending platforms etcetera .
All though there is no doubt that combatting money laundering activities is important but certain laws intended to do so should not come at expense of legitimate businesses otherwise it will only serve purpose of hindering growth rather than encouraging it among entrepreneurs across U