Recently, Bitcoin was able to climb above the $40,000 mark for the first time since April 2022, making a direct jump to the next resistance level at $45,000, where a sharp correction set in.

What is the cause of this correction? In the US, a draft law called the „Digital Asset Anti-Money Laundering Act“ has been introduced to clean up Bitcoin and cryptocurrencies.

As always, noble goals are behind this: to protect the consumer from fraud and prevent money laundering. At least officially.

However, industry publication Coincenter sees it differently. The draft law is „the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we have seen so far“.

Is a de-facto Bitcoin ban in the US likely? If the draft were to become law, numerous users and developers of the Bitcoin network would have to register as a „financial institution“, identify users personally, monitor transactions, record everything and take preventive measures in the event of suspicion.

In addition, all data protection tools and cryptocurrencies such as Tornado Cash or coins such as Monero (XMR) and Zcash (ZEC) should be prohibited.

But if all transactions with cryptocurrencies are just as easily traceable as, for example, with online transfers or credit card payments, a major advantage of cryptocurrencies would be gone.

These measures would therefore put the majority of crypto users and technical applications under general suspicion and massively interfere with privacy. Crypto entrepreneur Nico Moran therefore warns: the draft would correspond to a de-facto ban on self-storage and peer-to-peer transactions (P2P) in the US. Both are core elements of the Bitcoin ecosystem.

Consequently, supporters of cryptocurrencies are already storming against the draft law.

What are the chances of success for this draft law? The draft law is not new. It was submitted on December 14, 2022 by the Democratic Member of Parliament Elizabeth Warren together with the Republican Senator Roger Marshall.

Since the recent outbreak of war between Hamas and Israel, this US Senator has increasingly tried to discredit Bitcoin and other cryptocurrencies. Recently, she received public support from other senators and several large banks, apparently seeing their skins swimming away from the decentralized cryptocurrencies. After all, they make no money from a system in which they are not involved.

Nevertheless, the chances that the law will actually be passed are rather poor. The US Congress is dominated by the more „crypto-friendly“ Republicans. Warren’s previous success record with her legislative initiatives is also abysmal (305 submitted, 0 became law).

The fact that Warren makes outdated, exaggerated or false claims to push through her project does not make it better. It remains to be seen whether this strategy will pay off this time.

Consequently, the recent correction in cryptocurrencies may turn out to be a favorable buying opportunity in retrospect. Provided the legislative initiative fails in the US. That is the new risk for investors in cryptocurrencies.