US Government Removes Cryptocurrency AML Provisions from NDAA
Luisa Crawford Dec 11, 2023 06:42
The US government has removed two AML provisions relating to cryptocurrencies from the NDAA, indicating a cautious approach to crypto regulation and raising concerns about future AML measures.
The United States government recently made a significant move by removing two key provisions from the National Defense Authorization Act (NDAA) that aimed to address Anti-Money Laundering (AML) concerns in the realm of cryptocurrency. This action marks a notable shift in the government's approach to regulating digital assets.
Legislative Background and Provisions
The NDAA, primarily a legislation for authorizing the country's defense department expenditures, often includes various amendments. In this context, two amendments specifically targeted the oversight of cryptocurrency transactions to mitigate money laundering risks.
Risk-Focused Examination System: The first provision involved the U.S. Secretary of the Treasury collaborating with banking and governmental regulators to establish a comprehensive review system for financial institutions dealing in cryptocurrencies. This system was intended to focus on risk assessment and compliance with existing AML frameworks.
Combatting Anonymous Transactions: The second provision dealt with anonymous crypto asset transactions, particularly those involving crypto mixers and tumblers. It mandated a detailed report on the transaction volumes associated with sanctioned entities and the regulatory measures taken by other jurisdictions in this context.
Implications of Removal
It is clear that the United States government has shifted its position on strong crypto laws, particularly those linked to anti-money laundering, as seen by the elimination of these sections. This decision was made after recent discussions on concerns over the facilitation of terrorist financing and money laundering carried out by cryptocurrency. Over the course of a hearing that took place on November 15, the Financial Services Committee of the United States House of Representatives discussed unlawful actions that take place inside the cryptocurrency ecosystem. These activities included the role that exchanges and decentralized finance providers play in combating money laundering and terrorist funding.
The Digital Asset Anti-Money Laundering Act of 2022 and the Responsible Financial Innovation Act were the initial sources of inspiration for the modifications. These pieces of legislation were drafted with the intention of establishing safeguards against occurrences in the cryptocurrency business that are comparable to the collapse of FTX. These were put up by a group of senators, which included Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall, among others.
Taking these anti-money laundering measures linked to cryptocurrencies out of the National Defense Authorization Act (NDAA) highlights the continuing dispute and complexity surrounding bitcoin legislation. Despite the fact that it demonstrates a more circumspect attitude by the United States government in terms of placing stringent rules on the cryptocurrency industry, it also raises issues over the future direction of anti-money laundering efforts in the digital asset area.
Image source: Shutterstock