The Year In Crypto Policy - 2023

This week, we look at crypto policy highlights from Capitol Hill in 2023 and share some thoughts on what to expect in 2024.

Illicit Finance

Senate

Perhaps the most discussed topic in crypto recently has been how to address illicit finance concerns. In the Senate, proposals have focused on expanding existing AML/CFT rules and sanctions law. For example, Senator Warren's Digital Asset Anti-Money Laundering Act ("DAAMLA") would subject virtually anyone involved in facilitating transactions on a blockchain to the Bank Secrecy Act. Another bill, the Crypto Asset National Security Enhancement and Enforcement Act (“CANSEE Act”), would require anyone who "controls" a DeFi protocol – e.g., developers and investors of a certain threshold – to ensure those protocols comply with sanctions law.

A more targeted legislative proposal addressing illicit finance passed the Senate as an amendment to the NDAA. That amendment would have directed Treasury to establish AML examination standards tailored for crypto and commissioned a study on how to address the illicit use of mixers. But it was ultimately removed from the conferenced NDAA.

House

In the House, the Financial Services Committee unanimously passed the Financial Technology Protection Act 50-0. This bill would create a task force dedicated to studying and addressing illicit uses of emerging technologies, including digital assets. Given the unanimous committee vote, it may be a prime candidate for getting tacked onto a broader illicit finance/crypto package.