The United States Senate has approved the National Defense Authorization Act for Fiscal Year 2024 (NDAA), which, for the first time, specifically addresses the issue of cryptocurrency mixers. This legislative decision represents a significant milestone in cryptocurrency regulation and has important implications for the industry.
The aforementioned bill, approved on July 27th, “includes a provision targeted at cryptocurrency mixers, the coins that enhance anonymity, and the institutions involved in cryptocurrency trading”. [1]
Cryptocurrency mixers, also known as “mixers” or “tumblers,” are tools designed to provide greater privacy and anonymity in cryptocurrency transactions. These services mix or combine transactions from multiple users to make it more difficult to trace and identify the parties involved.
The National Defense Authorization Act is an annual legislative package that sets the budget and policies for the U.S. Department of Defense. In the NDAA 2024, an amendment related to cryptocurrencies was introduced by senators such as Cynthia Lummis, Elizabeth Warren, Kirsten Gillibrand, and Roger Marshall.
“The amendment was created with provisions taken from the Digital Asset Anti-Money Laundering Act, which was introduced in 2022, and the Responsible Financial Innovation Act, which aims to establish safeguards to prevent another FTX-style event within the industry.” [2]
The inclusion of cryptocurrency mixers in the NDAA 2024 addresses concerns about national security and the fight against money laundering. Authorities fear that these tools could be used to conceal illegal transactions, facilitate money laundering, and enable illicit activities without detection.
The amendment to include cryptocurrency mixers in the bill includes “key measures to monitor the use of technologies or services that enhance anonymity in relation to cryptocurrencies, such as mixers and tumblers. Additionally, the Treasury is expected to submit a report estimating the magnitude of transactions related to such technologies and provide recommendations for legislation or regulation accordingly.”[3]
Specifically, the amendment will require the establishment of standards for the examination of cryptocurrencies. This would facilitate risk assessment and ensure that companies comply with anti-money laundering laws and related sanctions.
This inclusion in the NDAA is due to the increased interest of malicious actors in using mixers for illicit purposes as cryptocurrency usage expands. The amendment aims to address this emerging challenge and provide a regulatory framework for more effective supervision of suspicious cryptocurrency activities.
As a result, the amendment obliges the U.S. Department of the Treasury to conduct a study to take more drastic measures against anonymous cryptocurrency transactions.
This includes the use of cryptocurrency mixers like Tornado Cash to maintain secure transactions. In 2022, Tornado Cash was sanctioned by the Treasury, prohibiting residents from using it, as it “was often used by malicious actors to conceal ill-gotten cryptocurrencies from hacks and exploits. According to the Treasury, the mixer did not impose controls that prevented money laundering by bad actors in the sector.”[4]
The approval of the NDAA 2024 with the inclusion of cryptocurrency mixers marks a milestone in the regulatory landscape of cryptocurrencies in the United States. This decision reflects the growing interest and concern of authorities regarding the potential misuse of cryptocurrencies for illicit purposes.
Note: To find the amendment enter here: https://www.congress.gov/amendment/118th-congress/senate-amendment/1000/text
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[1]https://es.cointelegraph.com/news/crypto-us-senate-approves-national-defense-bill-that-also-targets-crypto-mixers
[2]https://es.cointelegraph.com/news/crypto-us-senate-approves-national-defense-bill-that-also-targets-crypto-mixers
[3]https://decrypt.co/es/150458/criptomonedas-de-privacidad-y-mezcladores-son-incluidos-en-proyecto-de-ley-cripto
[4]https://es.cointelegraph.com/news/crypto-us-senate-approves-national-defense-bill-that-also-targets-crypto-mixers
