Senate Bill Raises Surprise Concerns for Crypto Industry

A surprise provision in a Senate spending bill could significantly impact the crypto industry by requiring stricter ID checks to combat terrorist financing. The industry is pushing back, seeking open dialogue and a more balanced approach.

A recent U.S. Senate intelligence committee spending bill included an unexpected section targeting cryptocurrency and its potential ties to terrorism. This provision, catching many in the industry off guard, has sparked criticism and lobbying efforts.

The bill aims to expedite the sanctioning process for “foreign digital asset transaction facilitators” linked to users supporting terrorist groups. This could significantly impact crypto businesses by requiring them to identify users more stringently to avoid sanctions.

While the Intelligence Authorization Act passed unanimously, the crypto section wasn’t publicly discussed. However, Senator Mark Warner’s office has since met with industry representatives, suggesting the issue is still under debate.

The crypto industry is pushing back, arguing that the provision is overly broad and could impact a wider range of players than intended. Additionally, concerns exist regarding the lack of a clear system for identifying violators and the significant authority placed on the Treasury Secretary.

Industry representatives highlight their willingness to collaborate on legislation tackling illicit crypto use. They point to the recent House approval of the FIT21 Act, demonstrating bipartisan support for well-crafted crypto regulations.

Given the industry’s growing political influence and the lack of open debate, the provision’s passage within the National Defense Authorization Act (NDAA) seems unlikely. The crypto industry is determined to avoid another surprise like the 2021 infrastructure bill’s crypto tax provision, emphasizing the importance of open communication with policymakers.

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