US Senate Advances Crypto AML Rules In Landmark Defense Budget Amendment

Key Points:

• US Senate includes crypto-focused AML legislation in NDAA.
• New rules mandate user data collection for crypto ATMs.
• Bipartisan amendment expected to pass in Senate.

According to DL News, the US Senate has introduced crypto-focused anti-money laundering legislation as part of its annual defense budget, the National Defense Authorization Act (NDAA). The amendment, approved by Senate leadership, aims to enforce new Anti-Money Laundering (AML) guidelines on federal regulators.

The NDAA, a significant and essential piece of legislation, is currently undergoing discussions and negotiations between the House and Senate. This latest amendment seeks to impose reporting requirements on various federal agencies, including the Drug Enforcement Agency and the Financial Crimes Enforcement Network. Additionally, the proposed bill mandates that cryptocurrency ATMs collect identifying information from their users, while operators would be obligated to report all operational locations to the government.

The version of the NDAA incorporating this amendment is expected to pass in the Senate, as it is scheduled for voting this week. Notably, this will represent a rare instance of crypto-related legislation being approved by either chamber.

Last week, Senate leaders indicated they anticipated a broad military policy package to pass the chamber with significant bipartisan support, potentially clashing with a mainly party-line plan adopted by the House of Representatives.

The NDAA is one of the few significant acts that Congress adopts each year, covering everything from military pay rises to ship and aircraft acquisitions. The fiscal 2024 bill permits a record expenditure of $886 billion.

The NDAA was approved by the House by a vote of 219-210, after Republicans introduced culturally conservative amendments addressing hot-button social concerns. The vote was nearly totally partisan, a break from the usual bipartisan backing for a law that has been enacted every year since 1961.

The amendment, surprisingly, has garnered support from both sides of the political spectrum, making it a bipartisan project. Key sponsors include Cynthia Lummis, a Republican Senator from Wyoming; Kirsten Gillibrand, a Democrat Senator from New York; Elizabeth Warren, a Democrat Senator from Massachusetts; and Roger Marshall, a Republican Senator from Kansas.

These sponsors represent diverse stances on cryptocurrency. For instance, Senator Warren has been a vocal critic of crypto for almost a decade, while Senator Lummis has expressed her support for digital currencies, even announcing “God bless Bitcoin” during a Senate session.

Senators Lummis and Gillibrand have worked together on crypto-related matters for years, notably contributing to the Responsible Financial Innovation Act, which is known for its favorable stance toward cryptocurrencies. On the other hand, Senators Warren and Marshall have previously been involved in proposing stricter know-your-customer rules, which had drawn criticism from the industry for potentially compromising user privacy.

The current amendment, conceived by a combination of ideas from the aforementioned legislations, marks a significant step toward establishing comprehensive crypto-focused AML regulations in the United States. As it progresses through the Senate, stakeholders in the cryptocurrency space are closely observing the potential implications and impact of the proposed legislation on the industry’s operations and privacy provisions.

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