House passes bill to combat illicit use of digital assets

The proposed legislation, titled the 'Financial Technology Protection Act of 2023,' was introduced by Rep. Zach Nunn. This bill proposes the creation of an independent financial technology working group within the Department of Treasury, a group tasked with tackling terrorism and illegal financial activities within the cryptocurrency sector. 

According to the bill, the working group will include representatives from various federal agencies, such as the Treasury's financial crimes enforcement unit and the Department of Justice (DOJ). Additionally, it will involve key players from the cryptocurrency industry, including fintech firms, blockchain intelligence companies, financial institutions, research organisations, and entities concerned with individual privacy and civil liberties.

The group's primary responsibilities 

The group's responsibilities will include researching the use of new financial technologies, including digital assets, for terrorism and illicit activities. It will also propose regulatory measures to improve efforts to combat terrorism, money laundering, and other illegal financial activities. 

Rep. Nunn emphasised the importance of ensuring that blockchain technology and digital assets can thrive in the US without being exploited by malicious actors. He stressed the need for collaboration between industry participants and federal agencies to protect innovative financial technologies. He also highlighted that the working group will involve both private organisations and sector experts to address these challenges. 

Nunn's concerns are supported by data from blockchain intelligence firm Chainalysis, which reported in 2022 that individuals and groups from Russia were significantly involved in various forms of cryptocurrency-related crime.

Other related developments 

In addition to this bill, recent months have seen the passage of other crypto-related bills, including one that restricts the Federal Reserve from issuing a central bank digital currency (CBDC). This bill narrowly passed in May, with supporters arguing it would prevent government surveillance of individuals' financial activities. 

Another significant legislative development was the passage of a resolution to establish a regulatory framework for cryptocurrency. This bill received strong support from Democratic House members, indicating a shift in their stance on digital assets.