- A backdoor effort to pass US digital asset regulations this year failed
- Anti-money laundering provisions were removed from the National Defense Authorization Act
- The dropped provisions also wanted to mandate a report on privacy coins and anonymity-enhancing technologies
A backdoor effort to get digital asset regulation passed in the US this year has failed after crypto provisions were dropped from a US defense bill. Two key provisions related to anti-money laundering in the crypto space were removed from the joint version of the National Defense Authorization Act (NDAA), a significant military funding bill in the United States. The dropped provisions aimed to establish an anti-money laundering examination standard for crypto assets and mandate a report on the use of privacy coins and other anonymity-enhancing technologies in crypto.
Concerns Raised Over Transactional Privacy
The NDAA, first passed in 1961, addresses the military budget and is seen as a must-pass bill. It often contains provisions that reflect the advancements and trends of the time, and the 2023 act was no different: the Senate version initially included the crypto provisions, although the House of Representatives version did not.
The Senate’s provisions focused on assessing reporting obligations for crypto assets under money-laundering rules and evaluating compliance by financial institutions, while another directed the Treasury Department to produce a report on the use of mixers and tumblers, transactions involving privacy tools, and the potential use of these tools by sanctioned entities. It also called for recommendations for legislation or regulation related to these technologies and services.
Provisions Dropped to Secure Signature
Senators Mark Warner, Mitt Romney, Jack Reed, and Mike Rounds also introduced a bill to expand US sanctions rules to parties facilitating financial transactions with terrorists. The bill emphasizes foreign digital asset companies involved in processing transactions for terrorist groups, with Hamas cited as a specific example.
The Senate’s attempt to sneak crypto regulation in through the back door didn’t work, however, as the provisions were dropped in order that the bill be approved by both sides of the House.