The US Senate is preparing to introduce a new bill, the Crypto-Asset National Security Enhancement Act of 2023, which would impose strict anti-money laundering requirements on decentralized finance (DeFi) protocols. The bill would require DeFi protocols to implement bank-like controls on their users, in an effort to combat crypto-facilitated crime and prevent money laundering and sanctions evasion.

The bill would apply to anyone who controls a DeFi protocol or makes an application available to use the protocol, and would require them to vet and collect information on customers, maintain anti-money laundering programs, report suspicious activity to the government, and block sanctioned individuals from using their protocol.

The bill would also expand the Treasury Department's authority to police alleged money launderers in non-traditional financial settings, including crypto.