Two crypto provisions addressing concerns related to anti-money laundering have been excluded from the joint version of the National Defense Authorization Act (NDAA), a critical military funding bill considered essential legislation. This development marks the conclusion of an indirect attempt to establish digital-asset regulations within the United States this year.
As per the joint bill released on Thursday by lawmakers from the U.S. House and Senate, the dropped provisions include the establishment of an anti-money laundering examination standard for crypto assets and the requirement for a report analysing the use of privacy coins or other “anonymity-enhancing technologies” in the crypto space. Notably, the House of Representatives version of the NDAA did not incorporate these provisions present in the Senate version.
The NDAA traditionally outlines the military budget for the upcoming year and is frequently amended with various additional provisions due to its status as one of the U.S.’s essential bills.
Among the Senate amendments, one proposed empowering the Secretary of the Treasury to institute a risk-focused examination and review process for financial institutions. This process aimed to assess the adequacy of reporting obligations for crypto assets under anti-money laundering rules and ensure compliance among firms.
Another amendment would instruct the Treasury Department to generate and publish a report focusing on mixers and tumblers’ use, the scale of transactions involving privacy tools, the potential utilisation of these tools by sanctioned entities, and related aspects. The Treasury would also be tasked with providing “recommendations for legislation or regulation” concerning the described technologies and services.
In a subsequent development on Thursday, Senators Mark Warner (D-Va.), Mitt Romney (R-Utah), Jack Reed (D-R.I.), and Mike Rounds (R-S.D.) introduced a bill designed to expand U.S. sanctions rules to include any entities facilitating financial transactions with terrorists. The bill specifically mentions Hamas as a key example. Notably, the legislation places a significant focus on “foreign digital asset companies” that may process or support transactions linked to terrorist groups.