U.S. lawmakers are actively considering the inclusion of crypto-related measures in end-of-year legislative packages, although industry insiders suggest that more substantial action may unfold in 2024.
Republican House Speaker Mike Johnson’s preference for a spending measure without a larger “omnibus” bill might impact the potential inclusion of multiple measures at the year’s end. However, certain crypto provisions could still find their way into other end-of-year bills.
One significant possibility is an amendment to the National Defense Authorization Act (NDAA) proposed by Senators Cynthia Lummis (R-Wyo.), Kirsten Gillibrand (D-N.Y.), Roger Marshall (R-Kan.), and Elizabeth Warren (D-Mass.). This amendment aims to compel regulators to establish examination standards for financial institutions involved in crypto activities.
Additionally, it calls for the Treasury Department to provide Congress with recommendations regarding crypto mixers. While the fate of this amendment remains uncertain, it has garnered attention in discussions about potential legislative actions.
Cody Carbone, Vice President of Policy for the Chamber of Digital Commerce, expressed the crypto industry’s acceptance of the proposed NDAA amendment. However, he noted reservations about Senator Warren’s bill, which seeks to address the use of crypto in money laundering and sanctions evasion.
This bill includes extending know-your-customer requirements to miners and wallet providers. Carbone emphasized the industry’s reluctance to impose new standards and burdens on ecosystem players who do not interact directly with customers.
The Financial Technology Protection Act is another bill that Carbone hopes to see added to the NDAA. This legislation proposes the creation of a working group involving representatives from various federal agencies, including the Treasury, to combat terrorism and illicit financing. Advocates believe this bill aligns with the industry’s objectives without unnecessary regulatory burden.
In addition to potential NDAA amendments, crypto provisions may find their way into final appropriations packages. Representative Josh Gottheimer (D-N.J.) has proposed allocating $3 Million to the Treasury Department for research and collaboration with blockchain analytics firms to combat terrorist financing.
While some provisions, such as Republican Representative Tom Emmer’s bid to defund the Securities and Exchange Commission for crypto-related enforcement actions, are less likely to be included, others could shape legislative outcomes.
Tensions have risen as Representative Patrick McHenry (R-N.C.), chair of the House Financial Services Committee, pushes for crypto legislation inclusion in the NDAA. While market structure and stablecoin bills have faced challenges, their potential inclusion remains uncertain.
McHenry’s efforts may hinge on cooperation from Senator Sherrod Brown (D-Ohio), who leads the Senate Banking Committee and has expressed skepticism toward the crypto industry.
Despite the odds, industry insiders anticipate a more dedicated legislative effort in 2024. The evolving landscape underscores the importance of crypto regulations and their potential impact on various sectors. As lawmakers navigate these complexities, the crypto industry remains engaged in discussions that could shape its regulatory future.
