A joint version of the National Defense Authorization Act, a military funding bill considered as must-pass legislation, removed two crypto provisions addressing anti-money-laundering concerns. This effectively ended a backdoor effort to pass digital asset regulations in the United States this year.
The U.S. House and Senate jointly published a bill on Thursday that omits provisions that would have required a report analyzing the use of privacy coins or other “anonymity-enhancing technologies” in crypto and established an anti-money-laundering examination standard for crypto assets. The provisions included in the Senate version of the NDAA were absent from the House of Representatives version.
The NDAA outlines the military budget for the next year, but because it’s one of the few bills that the US has to pass, it’s frequently changed to include different provisions.
The Secretary of the Treasury was directed in one of the Senate amendments “to establish a risk-focused examination and review process for financial institutions” in order to determine whether companies were complying with money-laundering regulations and whether their reporting obligations for cryptocurrency assets were sufficient.
The other would order the Treasury Department to compile and release a report on a variety of topics, including the usage of tumblers and mixers, the volume of transactions utilizing privacy tools, the potential use of those tools by sanctioned entities, and more.
Additionally, it would mandate that recommendations for laws or regulations pertaining to the mentioned technologies and services be made by the Treasury.
Senators Mitt Romney (R-Utah), Jack Reed (D-R.I.), Mike Rounds (R-S.D.), and Mark Warner (D-Va.) later on Thursday introduced a bill that aims to extend the reach of U.S. sanctions regulations to any parties that “facilitate financial transactions with terrorists,” citing Hamas as a prime example.
The majority of the bill’s focus is on “foreign digital asset companies” that may handle or otherwise assist transactions for terrorist organizations.