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It began with a cascade of sell orders that quickly morphed into a puke fest for long positions. Bitcoin tumbled to the $42,000 price level on Sunday amid razor-thin weekend liquidity as the sell orders took their toll. Then came the second significant punch on Monday when the Democratic Senator Elizabeth Warren, a known crypto skeptic, unveiled her anti-Bitcoin bill.

Bitcoin Futures Liquidations

As is evident from the above snippet, $126 million worth of long Bitcoin futures positions were liquidated on Monday, precipitating the cryptocurrency's collapse to the $40,000 price handle.

Elizabeth Warren's Bill Would Virtually Ban Bitcoin in the US

Senator Warren's Digital Asset Anti-Money Laundering Act of 2023 aims to prevent the use of Bitcoin and other cryptocurrencies in money laundering activities by introducing the following legal requirements within the bill:

Extends the responsibilities imposed under the Bank Secrecy Act (BSA), including Know-Your-Customer (KYC) requirements, to digital wallet providers, miners, and blockchain transaction validators.Closes the KYC and Anti-Money Laundering (AML) requirements loophole for unhosted digital wallets - where crypto assets are held under self-custody instead of with an exchange. This would force banks to scrutinize all transactions originating from unhosted wallets and verify the identities of transacting individuals.Further discourages banks from handling transactions that have been anonymized via crypto mixers.Requires the US Treasury, the SEC, and the CFTC to establish dedicated AML/CFT review processes for digital asset entities.Brings foreign banking transactions worth over $10,000 and involving digital assets owned by US residents within the purview of the BSA.Imposes additional reporting requirements on the owners of digital asset ATMs.

as non-custodial and decentralized software cannot plausibly perform centralized compliance functions, warren’s bill would effectively outlaw crypto in america

— Alex Thorn (@intangiblecoins) December 11, 2023

Should this bill turn into an act, it would virtually ban Bitcoin and other cryptocurrencies in the US courtesy of the fact that Bitcoin miners and validators are, by design, unable to determine the identity of every blockchain user.

requiring non-custodial open-source software to perform bank-like compliance is *the big attack* bitcoin’s enemies have always threatened. it’s impossible for bitcoin core, for example, to comply with this, so it amounts to an effective ban of bitcoin in the USA.

— Alex Thorn (@intangiblecoins) December 11, 2023

The clamp down on non-custodial wallets would virtually eliminate P2P transactions via crypto, going against the very ethos of this nascent sector.

Once the text of this bill was unveiled yesterday, some Bitcoin maximalists sought refuge in Senator Elizabeth Warren's piss-poor record at turning her sponsored bills into legislation. Consider the fact that out of the 330 bills that the Democratic Senator has sponsored, only 11 have ever managed to garner approval. This equates to a minuscule probability of just 3.33 percent.

correction — has 21 cosponsors (not 13)

listed here https://t.co/k9FO21PXu9

— Alex Thorn (@intangiblecoins) December 12, 2023

However, when one considers that the bill actually has 21 co-sponsors, including two Republican Senators, the prospects of the bill turning into an act become substantially brighter, especially given the razor-thin Republican majority in the House.

Do you think Bitcoin and other cryptocurrencies are about to be virtually banned in the US? Let us know your thoughts in the comments section below.