US Congress Proposes New Bill to Fight Cryptocurrency-funded Terrorism

The United States government has remained relatively quiet regarding cryptocurrencies.  Even as crypto has steadily risen to international prominence, policymakers have done little to propose regulations or a legislative framework that might accommodate the burgeoning asset class.

A new bill sponsored by House Representative Ted Budd (R-NC) of the Financial Services Committee, however, has cryptocurrencies in its sights, and it’ll look to combat the use of these digital coins in funding terrorist activities.

The Bill and its Goals

The Financial Technology Innovation and Defense Act’s proposal consists of three primary components: a technological task force, a rewards system, and the development of technological infrastructure to hone in on illicit use of cryptocurrencies.  A publicly accessible outline of the bill details these core goals:

“To establish an Independent Financial Technology Task Force, to provide rewards for information leading to convictions related to terrorist use of digital currencies, to establish a FinTech Leadership in Innovation Fund to encourage the development of tools and programs to combat terrorist and illicit use of digital currencies, and for other purposes.”

According to the write-up, the Secretary of the Treasury would serve as the task force’s head, and it would include the Attorney General, the CIA, the Financial Crimes Enforcement Network, the Secret Service, and the FBI.  Additionally, the Secretary of the Treasury could commission the assistance of private sector entities, such as banks, non-profits, think tanks, etc.

This task force would be charged with two primary responsibilities.  To begin, it would monitor illegal use of cryptocurrencies and other financial technologies related to terrorism.  Secondly, it would develop appropriate legislation and regulatory proposals to counter technologically-financed terrorist activities.

The rewards program would function as one might expect.  With it, the Attorney General would use the program to pay any individual who provides information that leads to the successful conviction of a party using cryptocurrencies for terrorism.  In its current stage, the bill does not outline the parameters of the rewards program in regards to the scale of compensation.

Finally, the bill gives the Secretary of the Treasury the permission to establish a “FinTech Leadership in Innovation Fund.”  This fund will be allocated towards the development of technologies that may detect illicit, terror-focused use of cryptocurrencies, and the “Secretary may make grants under this subsection to entities located in the United States, including academic institutions, companies, non-profit institutions, individuals, and any other entities locating in the United States that the Secretary determines appropriate.”

The proposal is the latest in bipartisan efforts by the House of Representatives to address cryptocurrency-financed terrorism.  Back in September of 2017, the House passed the Homeland Security Assessment of Terrorists Use of Virtual Currencies Act without amendment.  The legislation, which was originally proposed by Rep. Kathleen Rice (D-NY) in May of 2017, has yet to be passed in the Senate.