US Senate Approves Bill Targeting Crypto Mixers

• US senators believe crypto activities should be regulated to prevent fraud and situations such as the FTX collapse of 2022.
• The amendment addresses private coins and crypto mixers and their roles in aiding fraud.

Institutions engaging in crypto trading, privacy coins, and crypto mixers may soon be the target of new American regulations. The 2024 National Defense Authorization Act (NDAA), worth $886 billion, features an amendment that addresses private transactions and illegal activities. Interestingly, US senators from opposing sides of the crypto debate formed an unlikely alliance in approving the package.

The NDAA is a piece of legislation that allocates a budget for the US defense department. However, a group of senators, including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall, introduced a crypto-related amendment to the bill.

The modifications were developed using elements from the Responsible Financial Innovation Act, which intends to provide safeguards to prevent a huge collapse in the crypto industry, and the Digital Asset Anti-Money Laundering Act, which was first presented in 2022.

The lack of clear rules of the road at the federal level is creating a legal mess for the crypto asset industry while leaving Wyoming consumers and investors vulnerable to bad actors.

— Senator Cynthia Lummis (@SenLummis) July 28, 2023

Explaining the amendments, Senator Gillibrand said,

This amendment requires federal regulators to enact strong examination standards that will help prevent the utilization of cryptocurrencies in illegal activities. This is an important step in appropriately regulating crypto assets, and I’m grateful to Senators Lummis, Warren, and Marshall for their hard work on this legislation.

Warren added that “the most urgent problem in crypto today is its illicit use by rogue nations, ransomware gangs, drug traffickers, and cybercriminals.”

The amendment requires the establishment of standards for cryptocurrency to ensure that crypto service providers comply with relevant sanctions and anti-money laundering legislation. Republican Senator Marshall expressed hopes that the amendment “will set commonsense standards to ensure that proper guardrails are in place as crypto use continues to grow across the world.”

Two weeks after introduction, the first pieces of Lummis-Gillibrand have passed the Senate, weeding out bad actors in the crypto space and ensuring crypto assets are not used to evade sanctions or fund terrorism.

— Senator Cynthia Lummis (@SenLummis) July 28, 2023

Interestingly, the US House of Representatives recently passed its own version of the NDAA, which contains amendments on abortion and diversity programs. So, there’s likely to be a political conflict unless both chambers collaborate to find concessions and develop a new acceptable draft. If that happens, there’s a possibility that some amendments, like the one aimed at privacy coins and crypto mixers, might not make it into the final version.