US Senate Passes Comprehensive National Defense Act with Measures Addressing Cryptocurrency Mixers

On July 27, the United States Senate successfully passed the 2024 National Defense Authorization Act (NDAA) with a staggering budget of $886 billion. While the primary focus of the bill is to allocate federal funding for the country’s defense department, it also contains a noteworthy provision that takes aim at the world of cryptocurrencies, particularly crypto mixers and anonymity-enhancing coins.

The crypto-related amendment, spearheaded by a group of influential senators including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall, combines elements from the Digital Asset Anti-Money Laundering Act introduced in 2022 and the Responsible Financial Innovation Act. The goal is to set up protective measures to prevent potential events similar to the FTX incident within the crypto industry.

One of the main objectives of this amendment is to establish rigorous examination standards for businesses involved in cryptocurrencies. The purpose is to assess risks associated with crypto transactions and ensure strict compliance with relevant sanctions and anti-money laundering laws.

Furthermore, the amendment requires the U.S. Treasury Department to conduct a comprehensive study aimed at curbing anonymous crypto transactions. This includes a focus on crypto mixers like Tornado Cash, which have been utilized to obscure the identities of individuals involved in transactions.

It is worth noting that the U.S. Treasury had previously imposed sanctions on the crypto mixer Tornado Cash in 2022, which barred residents from utilizing the service. The mixer, originally designed to enhance privacy in crypto transactions, had unfortunately become a haven for malicious actors seeking to conceal ill-gotten cryptocurrencies acquired through hacks and other nefarious means. According to the Treasury, the mixer lacked sufficient controls to prevent money laundering activities by bad actors in the crypto space.

Aside from the crypto-related measures, the NDAA also features another noteworthy amendment that will require companies within the United States to disclose their investments in China. Senator Bob Casey emphasized the importance of this notification to enable the government to monitor the transfer of critical technology to potential adversaries.

In conclusion, the passing of the 2024 NDAA by the U.S. Senate marks a significant step in addressing concerns related to cryptocurrencies, particularly the use of crypto mixers for anonymous transactions. This legislative move reflects the government’s commitment to strengthening financial regulations and safeguarding national security interests in an evolving digital landscape.

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