US Senate approves national defense bill that also targets crypto mixers

An amendment in the bill tightens oversight on institutions that are engaging in crypto trading.

The United States Senate passed the 2024 National Defense Authorization Act (NDAA) worth $886 billion on the evening of July 27. The bill includes a provision that targets crypto mixers, anonymity-enhancing coins and institutions that are engaging in crypto trading. 

The NDAA is a bill that helps authorize how the country’s defense department can utilize federal funding. Within the bill, a crypto-related amendment was advanced by a group of senators, including Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand and Roger Marshall.

The amendment was created with provisions that were taken from the Digital Asset Anti-Money Laundering Act which was introduced back in 2022 and the Responsible Financial Innovation Act which aims to establish guardrails to prevent another FTX-style event happening within the industry.

seems pretty obvious that democrats have abandoned any stablecoin bill in favor of sneaking through this provision in the NDAA must pass bill.

anyone wanna guess what janet yellen will decide about whether KYC-less transfers of USDC are allowed? pic.twitter.com/sys38GI31z

— Spreek (@spreekaway) July 27, 2023

More specifically, the amendment will require establishing examination standards for crypto. This would help assess risk and make sure that businesses are in compliance with related sanctions and money laundering laws. 

Apart from this, it compels the Treasury Department to perform a study aimed at cracking down on anonymous crypto transactions. This includes the use of crypto mixers like Tornado Cash, that’s used to make transactions private.

Related: Crypto lobbyists still fighting to axe ‘unlawful’ Tornado Cash sanctions

In 2022, the U.S. Treasury Department issued sanctions against the crypto mixer Tornado Cash, barring residents from using the crypto mixer. While the mixer was designed for people to anonymize their crypto transactions, it was often utilized by malicious actors to hide their ill-gotten crypto from hacks and exploits. According to the Treasury Department, the mixer failed to impose controls that disallow money laundering from bad actors in the space.

Meanwhile, the NDAA also includes an amendment that will require companies in the U.S. to disclose their investments in China. U.S. Senator Bob Casey said that this notification is necessary for the government to understand how much “critical technology” is being transferred to their “adversaries.”

Magazine: Tornado Cash 2.0: The race to build safe and legal coin mixers