A bipartisan bill introduced to both the U.S. Senate and House of Representatives on Thursday would call for the federal government to study crypto use cases for illegal activity and provide recommendations on how to mitigate these uses.
The Financial Technology Protection Act, co-sponsored by Senators Kirsten Gillibrand (D-N.Y.) and Ted Budd (R-N.C.) and Congressmen Zachary Nunn (R-Iowa) and Jim Himes (D-Conn.), would create a working group tasked with studying how terrorists or other criminals might use cryptocurrencies and other new financial technologies, and create proposals for Congress and regulatory agencies aimed at countering these uses.
The goal is to conduct an analysis and develop a regulatory structure that responds to it, Nunn, a first-term Congressman, said in a phone call with CoinDesk. The bill was previously introduced twice.
“The reality is the threat vector is changing for our adversaries, not just for cybercriminals but really the terrorists and cartels and even nation-states that are using illicit money laundering to do everything from buying weapons to trafficking people across the border to buying fentanyl,” he said.
In a statement, Himes, who is the ranking member on the House Financial Services Committee’s subcommittee on intelligence, said “the rapid evolution of our financial systems demands increased attention to reduce risk and combat abuse by terrorist organizations.”
“I am glad to support this working group which will unite senior members of the Intelligence Community with experts in financial innovation under the shared mission of tracking illicit financing by malicious actors,” he said.
The bill was introduced ahead of a trio of hearings hosted by Financial Services Committee subcommittees and a House Agriculture Committee subcommittee, all focused on crypto or illicit finance.
The group would be composed of representatives from the U.S. Treasury Department, Financial Crimes Enforcement Network (FinCEN), the Internal Revenue Services (IRS), the Office of Foreign Asset Control (OFAC), the FBI, the Drug Enforcement Agency, the Department of Homeland Security, the Department of Justice, the Department of State and the CIA.
Industry representatives from analytics firms, financial institutions, research organizations and other financial technology companies would also be appointed to the group if the bill is passed.
A lot of these firms already have their own approaches to illicit finance, including their engagement with law enforcement, but “the problem is it’s pretty fragmented,” Nunn said. He hopes the bill would lead to a more unified approach to these issues from industry.
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The bill outlines a number of deadlines for the group, ranging from annual reports on what the group did over the past year and what recommendations it has; a final report four years after the bill is signed into law; and other interim documents.
Congress would be briefed on the results of these different reports, the bill said.
The bill does not get into the broader conversation in Congress about how crypto should be regulated. Nunn noted that there’s still jurisdictional questions between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), each of which reports to a different Congressional committee.
