Cryptocurrency Regulation Changes in 2023 Defense Bill

The U.S. Defense Bill for 2023 has undergone substantial changes ahead of the weekend, particularly in its approach to cryptocurrency regulations. Two key crypto-related provisions aimed at enhancing anti-money-laundering measures were notably removed from the final draft of the National Defense Authorization Act (NDAA).

Typically, the NDAA is a military-funding bill. However, it often includes various other legislative items because of its essential nature. This year’s NDAA initially included amendments from the Senate that sought to introduce stricter regulations for the crypto industry.

The Senate proposed amendments to establish an anti-money-laundering examination standard for crypto assets. Additionally, it aimed to require the Treasury Department to produce a detailed report on the use of privacy-enhancing technologies in cryptocurrencies. This report would cover the extent of transactions using privacy tools, the involvement of sanctioned entities, and the general use of mixers and tumblers in the crypto sphere.

However, the House of Representatives had a different stance, as its version of the NDAA did not include these crypto-specific provisions. The final version, a result of a joint effort by House and Senate lawmakers, also excluded these amendments.

The decision to omit these crypto regulations from the NDAA highlights the ongoing debate and complexity surrounding digital asset legislation in the U.S. It also reflects a shift in legislative priorities and the challenges in regulating the rapidly evolving cryptocurrency market