Senate Passes Military Bill With Crypto Provision

Table of Contents

• U.S. Senate Takes a Stand on Crypto 
• Merging Existing Acts
• Customary Approach To Legislation
• Broader Regulatory Initiatives

The United States Senate has passed an $886 billion military spending bill with strict anti-money laundering provisions for cryptocurrency. 

U.S. Senate Takes a Stand on Crypto 

On Thursday, the U.S. Senate made a significant move by passing the 2024 National Defense Authorization Act (NDAA), a $886 billion military spending bill that contains a provision that will significantly affect the crypto industry. 

Spearheaded by senators Kirsten Gillibrand, Cynthia Lummis, Elizabeth Warren, and Roger Marshall, the amendment aims to tighten oversight of financial institutions involved in crypto trading and clamp down on the use of crypto mixers and "anonymity-enhancing" assets. The senators hailed it as a substantial step in regulating crypto assets.

Merging Existing Acts

The amendment draws from two existing acts already presented earlier to the Senate. Elements from the 2023 Lummis-Gillibrand Responsible Financial Innovation Act and portions of Senator Warren’s and Senator Marshall’s Digital Asset Anti-Money Laundering Act, introduced in 2022, have been integrated into the bill. 

These additions mandate the Secretary of the Treasury to establish examination standards for crypto assets, helping with risk assessment and ensuring compliance with money laundering and sanctions laws. 

Furthermore, the Treasury Department will be required to conduct a study on countering anonymous crypto transactions, specifically targeting the use of mixers to obscure fund origins.

Customary Approach To Legislation

The inclusion of crypto-related provisions in a military bill may raise eyebrows. However, the practice of adding non-defense-related amendments to military bills is not uncommon. 

Furthermore, the senators have defended this move by highlighting the importance of combating illicit finance within the crypto industry. Senator Lummis emphasizes that this measure is crucial for identifying and rooting out bad actors in the sector.

Additionally, the bill aims to address concerns related to national security, ensuring that crypto assets are not exploited to evade sanctions or fund terrorist activities. 

As the House has already passed its version of the NDAA, both chambers will now enter negotiations to reconcile differences and reach a consensus on the final version of the bill. This process is essential for the legislation's passage and enactment.

Broader Regulatory Initiatives

In conjunction with the NDAA, other congressional committees have also taken steps to address the regulatory challenges posed by the crypto industry. The House Agriculture Committee recently advanced the Financial Innovation Technology for the 21st Century Act to establish a federal regulatory framework for cryptocurrencies in the United States. 

The House Financial Services Committee passed its version a day earlier, focusing on establishing clear criteria for classifying crypto assets as securities or commodities.

As the House and Senate continue their negotiations, the outcome will determine the extent of regulatory measures imposed on the crypto sector and its impact on financial institutions and traders alike.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.