The US government has streamlined the National Defense Authorization Act (NDAA) by striking off two critical cryptocurrency provisions aimed at enhancing anti-money laundering (AML) protocols. The NDAA, which dictates the usage of federal funds by the defense department, originally included measures for a stringent review and reporting system for crypto transactions to curb illegal activities.
The removed directives included a comprehensive plan that required the Secretary of the Treasury to collaborate with financial regulators to implement a risk-focused examination of cryptocurrencies within financial entities. Additionally, the second provision targeted the anonymity of crypto transactions, specifically those involving mixers and tumblers, and called for a detailed report on transactions tied to sanctioned bodies, as well as the regulatory measures taken by other countries.
Despite the removal of these amendments, the government’s commitment to thwarting the misuse of digital assets remains evident. On July 28, the Senate passed an $886 billion NDAA, which still reflects elements from the Digital Asset Anti-Money Laundering Act and the Responsible Financial Innovation Act. These were initially introduced to prevent another debacle akin to the FTX incident, under the guidance of senators like Cynthia Lummis and Elizabeth Warren.
The discourse on crypto’s role in money laundering and terrorist financing continues to be a significant concern for the US. A recent meeting by the Financial Services Committee of the US House of Representatives on November 15 highlighted the urgency in addressing the illicit use of the crypto ecosystem, emphasizing the importance of proactive measures by exchanges and decentralized finance entities.
