US gov’t removes two crypto AML rules from national defense bill

The United States government has removed two provisions from the National Defense Authorization Act (NDAA) that were designed to address anti-money laundering (AML) concerns related to cryptocurrencies.

The NDAA is legislation that authorizes how the country's defense department can use federal funds. Among the extensive list of provisions Removed from the NDAA, two specifically outlined a system of comprehensive review and reporting of crypto activities to combat illicit practices.

Report of the Conference on the National Defense Authorization Act. Source: US Senate Armed Services Committee

The first provision directed the US Secretary of the Treasury to coordinate with banking and government regulators to establish a risk-focused cryptocurrency examination and review system for financial institutions.

The second provision addressed the fight against anonymous cryptoasset transactions, in particular involving mixers and crypto glasses.

This involved producing a report detailing transaction volumes of cryptoassets linked to sanctioned entities. Additionally, the report would cover regulatory approaches taken by other jurisdictions.

The following will provide guidance on implementing crypto regulations to the US government:

"Recommendations for legislation or regulation related to the technologies and services described in paragraphs (1) and (3)."

On July 28, Cointelegraph reported that the United States Senate passed the NDAA worth $886 billion.

Cryptocurrency-related amendments included elements of the Digital Asset Anti-Money Laundering Act, introduced in 2022, and the Responsible Financial Innovation Act, which seeks to establish precautions to prevent another FTX-style incident in the industry.

This was proposed by a team of senators, including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand and Roger Marshall.

Related: FinCEN Proposes Designating Cryptocurrency Mixers as Money Laundering Centers

In recent times, the US government has been deliberating on issues related to money laundering and terrorist financing facilitated through the use of cryptocurrencies.

The US House of Representatives Financial Services Committee held a meeting on November 15 to discuss illegal activities within the crypto ecosystem.

During the meeting, it was also reviewed how proactive crypto exchanges and decentralized finance providers are in preventing money laundering and terrorist financing.

Magazine: Lawmakers' fear and doubts drive proposed US crypto regulations