Senators Thom Tillis (R-NC) and Bill Hagerty (R-TN) released the Ensuring Necessary Financial Oversight and Reporting of Cryptocurrency Ecosystems (ENFORCE) Act as a proposed solution to the U.S. Treasury’s inquiry into stronger legislation to address digital asset anti-money laundering and more secure treatment of digital assets. 

The ENFORCE Act also serves as a counterproposal to the Digital Asset Anti-Money Laundering (DAAML) Act written by U.S. Senators Elizabeth Warren (D-MA) and Roger Marshall (R-KS), according to the Digital Chamber.

The purpose of the ENFORCE Act is to clarify "that any centralized and customer-facing digital asset institutions falls under a definition found within the Bank Secrecy Act(BSA)/anti-money laundering (AML) and must abide by long-established AML and know-your-customer (KYC) requirements."

The Act has eight sections within it, including one that creates a new category of digital asset financial institution, one that requires suspicious activity reports, creates a pilot program to share information on illicit use of digital assets, and requires setting anti-money laundering examination standards. 

“We must take action to stop bad actors who launder with cryptocurrency, however this does not provide a license for heavy-handed, regulatory-obsessed lawmakers to regulate an entire industry into oblivion,” Tillis said in a release. “Congress needs to focus on right-sizing its regulatory approach to cryptocurrency, which requires building consensus among lawmakers, law enforcement, and stakeholders to protect consumers and fight illicit actors.

The Digital Chamber’s analysis of the bill notes that it “ensures the digital asset sector is not treated more harshly than other sectors,” and is predicted to involved in discussions of final legislation for this subject.