US passes military spending bill, aims to curb crypto money laundering

The U.S. Senate has approved the 2024 National Defense Authorization Act (NDAA). The bill included a provision to strengthen regulatory scrutiny of financial institutions involved in crypto trading, particularly mixers and anonymity-enhancing tokens, focusing on enhancing oversight and transparency of crypto transactions.

Bipartisan senators unite to propel crypto regulation

The bipartisan group of U.S. Senators, including Kirsten Gillibrand, Cynthia Lummis, Elizabeth Warren, and Roger Marshall, had proposed this amendment. They highlighted that this step taken by Congress is one of the most significant actions regarding crypto assets regulations in the U.S. up to this point.

The provision entails the Secretary of the Treasury establishing examination standards for crypto assets. This step aims to assist examiners in effectively evaluating risk and ensuring adherence to anti-money laundering and sanctions regulations.

The amendment was created by combining elements from two existing bills: the 2023 Lummis-Gillibrand Responsible Financial Innovation Act and Sen. Warren’s and Sen.Marshall’s Digital Asset Anti-Money Laundering Act. 

Furthermore, the Treasury Department is mandated to conduct a study on tackling anonymous crypto asset transactions, which includes investigating the use of crypto mixers often employed to hide funds. 

Tackling crypto crimes

Addressing the importance of curbing illicit finance within the crypto asset industry, Senator Lummis emphasized the need to prevent individuals with ill intentions from exploiting crypto assets to evade sanctions or sponsor terrorism.

The House Financial Services Committee recently made strides by passing the Financial Innovation and Technology for the 21st Century Act and the Blockchain Regulatory Certainty Act.

The first bill, enjoying a 35-15 majority, aims to provide clear guidelines for cryptocurrency firms regarding their registration process. 

Introducing amendments during the bill consideration process is common practice, even if they do not directly relate to the main subject. This allows for a more comprehensive range of topics to be addressed and discussed.

The House had already approved its version of the NDAA, representing a substantial piece of legislation. The next crucial step involves negotiation and consensus-building between both chambers to reach an agreeable version that can ultimately pass through the legislative process.

In June, US Treasury Secretary Janet Yellen highlighted the need for more stringent digital assets regulation to safeguard consumers against crypto-related frauds and scams.