The United States government recently made significant changes to the National Defense Authorization Act (NDAA) by eliminating two provisions intended to tackle anti-money laundering (AML) concerns within the cryptocurrency space.
The NDAA is a crucial piece of legislation that dictates how the country’s defense department can allocate federal funding.
Among the numerous provisions removed from the NDAA, two specifically addressed the need for a comprehensive review system and reporting mechanisms to combat illicit activities related to cryptocurrencies.
The first provision required the US Secretary of the Treasury to collaborate with banking and government regulators to establish a risk-focused examination and review system for cryptocurrencies within financial institutions.
This system aimed to enhance oversight and ensure compliance with AML regulations.
The second provision focused on addressing anonymous cryptocurrency transactions, particularly those involving crypto mixers and tumblers.
It mandated the creation of a report detailing the extent of crypto asset transactions associated with sanctioned entities, along with an analysis of regulatory approaches adopted by other jurisdictions.
This report was intended to guide the development of cryptocurrency regulations in the United States.
Back in July, the United States Senate approved the NDAA, allocating $886 billion for defense purposes.
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Notably, the NDAA included amendments inspired by the Digital Asset Anti-Money Laundering Act, introduced in 2022, and the Responsible Financial Innovation Act.
These amendments sought to establish precautionary measures to prevent incidents similar to the FTX debacle in the cryptocurrency industry.
The proposal for these amendments was put forward by a group of senators, including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall.
In recent times, the US government has been actively addressing concerns related to money laundering and terrorist funding facilitated through cryptocurrencies.
The Financial Services Committee of the US House of Representatives convened on November 15 to discuss illegal activities within the crypto ecosystem.
During this meeting, a thorough review was conducted to assess the proactive measures taken by cryptocurrency exchanges and decentralized finance providers to prevent money laundering and terrorist financing.
In summary, the United States government’s decision to eliminate two key provisions from the NDAA indicates a shift in its approach to cryptocurrency regulation.
While these provisions aimed to enhance oversight and combat illicit activities, their removal reflects ongoing debates and discussions within the government regarding the appropriate regulatory framework for the cryptocurrency industry.
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