On Thursday, The US Senate passed the 2024 National Defense Authorization Act (NDAA) with provisions targeting crypto anonymity sneaked into the bill. The amendment, hardly related to the military nature of the act, was introduced on Wednesday by a bipartisan group of senators. Senators Kirsten Gillibrand (D-N.Y.), Cynthia Lummis (R-Wyo.), Elizabeth Warren (D-Mass.), and Roger Marshall (R-Kan.) acted in unison to propose a tighter oversight of crypto trading and limiting "anonymity-enhancing" tools.
The amendment calls for stronger accountability standards in the crypto market
In the first section, the amendment calls for the establishment of dedicated risk-focused examination and review processes to assess crypto assets-related activities. The Secretary of the Treasury, in collaboration with key banking and financial institutions, will oversee the process for money service businesses. Similarly, the Securities and Exchange Commission and the Commodity Futures Trading Commission will conduct examinations for entities regulated by them.
The assessment will focus on the adequacy of reporting obligations and anti-money laundering programs, as well as compliance with anti-money laundering and countering the financing of terrorism requirements. These measures aim to ensure accountability and adherence to regulations within the crypto assets space.
US Senate wants BTM customers' ID verified
In the second section, things get more chilling. The provisions target "crypto asset kiosks", i.e., stand-alone machines, including automated teller machines (ATMs), aka Bitcoin teller machines (BTMs), allowing customers to buy, sell, or exchange cryptocurrency. Proposed regulations require kiosk owners to regularly update their physical addresses and collect transaction information, including "the name, date of birth, physical address, and phone number of each counterparty to a transaction."
Within two years from the amendment's enactment, crypto kiosk owners will be obligated to "verify the identity of each customer using a valid form of government-issued identification or other documentary method." Currently, there are about 36,000 BTMs in the US, more than half of which don't require photo ID for transactions between $250 and $1,000. Verification methods vary, with some BTMs accepting a cellphone number and others "inviting" for a palm scan.
Crypto mixers and tumblers under scrutiny
Last but not least, the amendment deals with crypto mixers and tumblers – crypto tools that blend together cryptocurrencies from many users to obfuscate the origin of the funds. According to the provisions, the Director of the Financial Crimes Enforcement Network of the Department of the Treasury must produce a report containing:
- an analysis of the typologies of crypto mixers and tumblers combined with historical transaction volume,
- an estimation of the percentage of transactions relating to mixers and tumblers,
- an assessment of potential non-illicit uses of mixers and tumblers,
- an analysis of regulatory approaches in other jurisdictions and recommendations for legislation relating to mixers and tumblers.
"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 commented said in a release.