2023 U.S. Defense Bill Excludes Crypto Provisions: A Deep Dive

• Removal of Crypto Provisions from National Defense Authorization Act
• Details of the Omitted Provisions
• Additional Insight on the NDAA
• Senate Amendments
• New Bill Introduced to Expand U.S. Sanctions Rules

Removal of Crypto Provisions from National Defense Authorization Act

In an unexpected turn of events, two crypto-related provisions concerning anti-money-laundering have been removed from the joint version of the National Defense Authorization Act (NDAA). The NDAA is a military funding bill acknowledged as essential legislation and this development marks the conclusion of a covert attempt to pass digital-asset regulations this year in the United States.

Details of the Omitted Provisions

As revealed in a joint bill presented on Thursday by U.S. House and Senate lawmakers, provisions intending to establish an anti-money-laundering examination standard for crypto assets and necessitate a report scrutinizing the usage of privacy coins or other anonymity-enhancing technologies in crypto were excluded. The House of Representatives' version of the NDAA did not include these provisions found in the Senate's version.

Additional Insight on the NDAA

The NDAA outlines the military budget for the upcoming year. As one of the few must-pass bills in the U.S., it is frequently supplemented with various other provisions.

Senate Amendments

The Senate amendments featured a mandate for the Secretary of the Treasury to create a risk-focused examination and review process for financial institutions. This review process would assess whether reporting obligations for crypto assets under money-laundering rules were sufficient and if firms were following compliance. Another directive would instruct the Treasury Department to generate and publish a report on the usage of mixers and tumblers, the volume of transactions utilizing privacy tools, the degree to which sanctioned entities might be using these tools and more. Furthermore, the Treasury was to develop recommendations for legislation or regulation relating to the technologies and services described.

New Bill Introduced to Expand U.S. Sanctions Rules

Later on Thursday, Senators Mark Warner, Mitt Romney, Jack Reed, and Mike Rounds introduced a bill with the aim to broaden U.S. sanctions rules to any parties that facilitate financial transactions with terrorists, with Hamas cited as a primary example. The bill primarily focuses on foreign digital asset companies that may process or otherwise support transactions directed to terror groups.

Edited by Jonathan Stoker