The United States Senate has approved the 2024 National Defense Authorization Act (NDAA) that carries an amendment aimed at countering anonymous transactions and illicit activities in cryptocurrencies. The $886 billion bill, which primarily defines the annual budget for the U.S. Department of Defense, has thus become a vehicle for unrelated crypto regulation.
Promoted by a bipartisan team of lawmakers — Wyoming Republican Cynthia Lummis, often dubbed “the Bitcoin senator,” and New York Democrat Kirsten Gillibrand — the amendment emerged from their comprehensive crypto legislative proposal known as the Responsible Financial Innovation Act.
Senator Gillibrand, in a statement to Decrypt, expressed that the amendment mandates federal regulators to implement robust examination standards to prevent the misuse of cryptocurrencies in illegal activities. She acknowledged the collaborative efforts of Senators Lummis, Warren, and Marshall in realizing this legislation.
The crypto amendment, which also involves Elizabeth Warren and Roger Marshall — critics of digital assets — encompasses elements from their collaborative effort, the Digital Asset Anti-Money Laundering Act. The measures include close monitoring of “anonymity-enhancing technologies or services used in connection with crypto assets, such as mixers and tumblers.” The Treasury is anticipated to deliver a report estimating the scale of transactions associated with such technologies and to propose legislative or regulatory recommendations.
The four senators’ provisions task federal regulators with enforcing rigorous examination standards to deter the misuse of crypto for unlawful activities.
When the amendment was first announced, Senator Lummis maintained that thwarting illicit finance in the crypto industry was a critical part of their proposed act. Meanwhile, Senator Warren referred to digital assets as a “national security threat,” arguing that crypto is increasingly being used by ransomware gangs, drug traffickers, and rogue nations for illicit financial activities.
Despite passing in the Senate, this crypto regulatory development marks the beginning of a challenging political journey. The House of Representatives approved a significantly different version of the NDAA earlier this month, which includes contentious amendments concerning abortion and diversity programs. The two chambers must now negotiate a mutually acceptable version, potentially leading to the removal of some amendments, such as the crypto regulation.
