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Fintech Bill: US Congress Plans to Combat Cryptocurrency Use in Terrorism Financing

Last Updated March 4, 2021 5:03 PM
Gerelyn Terzo
Last Updated March 4, 2021 5:03 PM

US policymakers have made targeting cryptocurrency-fueled terrorism and the illicit use of digital coins for any purpose a priority.

Rep. Ted Budd (R-NC) of the House Financial Services Committee on Jan. 10 introduced the Financial Technology Innovation and Defense Act to Congress. A key feature of the bill  is a fintech task force designed to reward tipsters offering viable information about digital currencies and terrorist use. US policymakers have cryptocurrency-fueled terror on their bipartisan radar, as evidenced by a similar bill, the Homeland Security Assessment of Terrorists Use of Virtual Currencies Act, drafted by Rep. Kathleen Rice (D-NY) last May.

The fact that US lawmakers are focused on intercepting the illegal use of cryptocurrencies and enforcing ethical standards is a positive development for the industry, as it suggests that policymakers have come to terms with a digital coin world even if they’re not in the center of it. It seems like a much more productive use of resources versus attempting to thwart bitcoin to pay for transactions at retailers, for instance.

Rep. Budd’s bill proposes the establishment of an Independent Financial Technology Task Force comprised of half-a-dozen federal officials and a handful from the private sector across banking, nonprofits and think tanks. These individuals would be selected by Treasury Secretary Steven Mnuchin, who would also be included in the Task Force and who recently weighed in on the threat of treating bitcoin as an offshore Swiss account for money-laundering.

Nuts and Bolts

Similar to how the Federal Bureau of Investigation (FBI) offers rewards for information leading to the most-wanted criminals, the task force would create a program to compensate “any person who provides information leading to the conviction of an individual involved with terrorist use of digital currencies,” as per the bill. It doesn’t disclose the size of the reward or whether it would be paid in fiat money or bitcoin.

The task force would further develop a portfolio, dubbed the Fintech Leadership in Innovation Fund, which would be dedicated to developing tools to uncover terror financing and other “illicit use of digital currencies.” Through the fund, the task force can also distribute grants to US companies, universities, etc. that they deem relevant. In making these distributions, officials are especially keen on technologies that support KYC/AML protocols.

At about the same pace lawmakers and regulators are crafting policy, they’re learning about cryptocurrencies. A Senate panel is scheduled to hear testimony from CFTC and SEC officials on bitcoin and the apparent risks to the financial sector in early February, as per a Reuters report . The US SEC already has a task force, their’s focused on ICOs, and the CFTC is the regulator that gave the green light for the CME and CBOE to launch bitcoin futures trading.

Featured image from Shutterstock.