California Democrat Brad Sherman has introduced a significant crypto amendment to the National Defense Authorization Act (NDAA) bill, which aims to enhance the U.S. Treasury and financial regulators' powers to control and monitor digital asset transactions.

Sherman's amendment highlights the growing concern over the use of cryptocurrencies in global transactions, particularly those that could potentially undermine U.S. national security interests. By integrating this amendment into the NDAA, Sherman aims to provide the U.S. Treasury and financial regulators with enhanced powers to control and monitor digital asset transactions, thereby addressing potential threats from foreign entities.

The amendment starts off by granting the U.S. Treasury Secretary explicit authority to prohibit digital asset trading platforms and transaction facilitators under U.S. jurisdiction from engaging with cryptocurrency addresses linked to Russia. This provision aims to prevent Russian-affiliated entities from leveraging cryptocurrencies to circumvent economic sanctions or engage in activities detrimental to U.S. national security.

The amendment also addresses reports of large offshore cryptocurrency transactions by mandating that the Financial Crimes Enforcement Network (FinCEN) require United States taxpayers to report any transaction exceeding $10,000 in value if it involves digital assets through one or more accounts outside of the United States. This reporting must be done using FinCEN Form 114 (FBAR) and in accordance with section 5314 of title 31, United States Code.

The amendment stipulates that this requirement should be enforced within 120 days of the enactment of the Act, designed to enhance transparency and prevent the use of offshore accounts to evade taxes or launder money through cryptocurrencies.