Senate passes defense bill with amendment to block crypto's illicit use

The Senate passed a national defense bill Thursday night, which included an amendment to prevent the use of cryptocurrency in illicit financial transactions.

"Prohibiting the use of cryptocurrencies for money laundering and illicit finance is critical to both our national security and economy," Sen. Kirsten Gillibrand, D-N.Y., said in a news release. "This amendment requires federal regulators to enact strong examination standards that will help prevent the utilization of cryptocurrencies in illegal activities."

The included amendment would require the secretary of the Treasury to establish examination standards for cryptocurrency assets, which would "give examiners more guidance in how to assess the real risks of crypto assets," aid in ensuring compliance with anti-money laundering laws and provide crypto exchanges more regulatory clarity, the news release states.

It would also require the Treasury Department to conduct a study on combating anonymous crypto transactions, including providing data on their use and recommendations for legislation or regulation.

The amendment was included in the Senate's version of the National Defense Authorization Act, which must be reconciled with the House version of the bill.

Provisions of the amendment were taken from the Lummis-Gillibrand Responsible Financial Innovation Act, introduced by Ms. Gillibrand and Sen. Cynthia Lummis, R-Wyo., and the Digital Asset Anti-Money Laundering Act, introduced by Sens. Elizabeth Warren, D-Mass., and Roger Marshall, R-Kan., according to the news release.

Separately, the NDAA did not include an amendment that would have banned the investment of Thrift Savings Plan assets in China. The $796 billion Thrift Savings Plan serves as the retirement plan for 6.8 million federal employees and members of the uniformed services.

In May, six senators, including Sens. Marco Rubio, R-Fla., and Rick Scott, R-Fla., introduced a bill to prevent the investment of TSP assets in companies headquartered in a "country of concern," listed on the exchange of a country of concern or substantially controlled by a country of concern. Besides China, the senators named countries of concern as Iraq, North Korea and Russia.

The bill was originally introduced in May 2021 but did not move.

"The Senate had a chance to prevent China from benefiting from our military service members and federal workers' retirement funds," Mr. Rubio said in a Thursday news release. "Instead, it allowed pressure from Wall Street and other special interests to block this common-sense amendment. There is strong bipartisan support for this proposal, and I will continue to work with my colleagues to stop federal retirement funds from benefitting the Chinese Communist Party."