Crypto industry faces new pressure from anti-money laundering regulations

A bipartisan group of senators on Wednesday introduced an amendment to the National Defense Authorization Act (NDAA) that includes new anti-money laundering provisions for the crypto industry.

Sens. Kirsten Gillibrand (D-N.Y.) and Cynthia Lummis (R-Wyo.), Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.), have teamed up to put forward the proposal, geared at preventing the use of crypto assets in illicit financial transactions, in an amendment to annual legislation the that sets the budget for the nation’s armed forces.

The amendment would “require regulators to set examination standards for financial institutions engaged in crypto asset activities and require the Treasury Department to give recommendations to Congress regarding crypto asset mixers and anonymity-enhancing crypto assets,” according to Gillibrand’s office.

“Prohibiting the use of cryptocurrencies for money laundering and illicit finance is critical to both our national security and economy. This amendment will require federal regulators to enact strong examination standards that will help prevent the utilization of cryptocurrencies in illegal activities,” Gillibrand said in a release. 

The Senate began considering the annual national defense policy package on Tuesday following the House’s approval of the must-pass legislation last week. Conservative Republican lawmakers in the House added several amendments, leading to an unusually partisan vote.

The proposed amendment on cryptocurrency was developed from a bill Lummis and Gillibrand reintroduced earlier this month that’s aimed at creating a regulatory framework for crypto assets — as well as from a bill by Warren and Marshall introduced last year to extend anti-money laundering to cryptocurrency.

Lummis and Gillibrand have been seen as more supportive of the crypto sector, while Warren and Marshall have been more critical of the quickly growing industry, pushing to expand the government’s regulatory power over crypto.

Marshall said in a statement that the newly proposed bipartisan amendment to the NDAA “will set commonsense standards to ensure that proper guardrails are in place as crypto use continues [to] grow across the world.”