House Passes Crypto Anti-Illicit Financing Bill Seeking Creation Of Fintech Protection Working Group

The U.S. House of Representatives on Monday passed a proposed bill that seeks to establish a fintech working group focusing on combating terrorism and illicit financing in the digital assets space.

Financial technology protection

Introduced by Rep. Zach Nunn, R-Iowa, the "Financial Technology Protection Act of 2023" seeks to establish an independent financial technology working group under the Department of Treasury that will "combat terrorism and illicit financing" within the cryptocurrency industry.

As per the proposed legislation, the working group must involve not just related federal agencies such as the Treasury's financial crimes enforcement unit and the Department of Justice (DOJ), but also key stakeholders in the crypto space.

The working group should have representatives from fintech firms, blockchain intelligence companies, financial institutions, research groups, and institutions or organizations 'focused on individual privacy and civil liberties."

Working group's tasks

The resolution states that the working group should "conduct research on terrorist and illicit use of new financial technologies, including digital assets," and develop regulatory recommendations to improve efforts in the U.S. to combat terrorism, money laundering, and illicit financing.

The bill's passage in the House comes at a critical period in the crypto space as concerns linger about the possible use of digital assets by terrorists and threat actors.

Crypto is here to stay: Nunn

During Monday's session, Nunn noted that "blockchain technology and digital assets are here to stay, and we need an environment in which they can grow in the United States without being exploited by adversaries."

Nunn further highlighted the need for collaboration between industry players and federal agencies to protect innovative technologies within the financial world. He said the working group will include "private organizations and their innovation, as well as private sector experts to combat terrorism and illicit financing on digital platforms."

He said protections are necessary not only to protect the American public from threat actors but also from U.S. adversaries, including the People's Republic of China and the Russian Federation.

Nunn's comments are backed by data, as blockchain intelligence firm Chainalysis said in a 2022 report that certain groups and individuals from Russia "account for a disproportionate share of activity in several forms of cryptocurrency-based crime."

House lawmakers taking crypto more seriously than ever

More and more House lawmakers are recognizing the potential of cryptocurrencies, as proven by the increase in crypto-related bills having passed the chamber in recent months, one of which blocks the Federal Reserve from issuing a central bank digital currency (CBDC).

The said proposed legislation narrowly passed the House in May, but GOP members who voted in favor of the bill hailed the milestone, saying it should stop the government "spying" on the American public's financial activities.

Probably the biggest breakthrough in Congress was the passage of a resolution that sought to establish a regulatory framework for crypto. The bill saw overwhelming support from Democratic House members, signaling a shifting tone among Democrats, who were largely silent about their views on digital assets in the past.