In a research note, TD Securities said this legislation is broadly positive for the crypto sector as it provides political cover for lawmakers to support future stablecoin and crypto market structure legislation.
The legislation, known as the Digital Asset Anti-Money Laundering Act, mandates that crypto wallet providers and miners improve their customer identification processes. It also directs the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) to implement customer verification procedures and provide guidance to banks on handling crypto transactions, especially those involving privacy mixers that conceal user identities.
The House is expected to pass a crypto anti-money laundering bill under suspension of the rules, requiring a two-thirds vote for passage. “We expect this will clear the two-thirds vote required for it to pass the House,” says TD Securities.
There is no political downside to supporting the legislation. For critics, it addresses money laundering concerns, while advocates gain protection from accusations of facilitating criminal activity, the research notes.
The Financial Technology Protection Act will establish a working group involving banking agencies, the crypto industry, and law enforcement to combat terrorism and illicit financing on digital platforms. This group will research illicit financial transactions and propose legislative actions to enhance AML and counter-terrorism efforts.
TD Securities explains, “We do not see how such a mandate would be negative for crypto trading platforms or the broader crypto ecosystem. It does not impose any new burdens on the industry but creates a dialogue with law enforcement.”
The bill’s passage would help advance stablecoin legislation this fall and crypto market structure legislation next year. “It shows that both the industry and the government are serious about AML/BSA controls for crypto,” TD Securities notes. It provides political cover for lawmakers supporting these bills.
TD Securities is skeptical about the bill getting floor time in the Senate. However, the broker analyst believes the House vote is more crucial as it provides political protection for future votes on stablecoin and market structure legislation. “Lawmakers don’t need this to become law to get political protection,” the report concludes.
Source: Cryptocurrency - investing.com
