In response to alarming reports linking Hamas to funding through crypto currencies, Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.), alongside Representative Sean Casten (D-Ill.), intensified pressure on Tuesday by dispatching a letter to the White House and Treasury, urging a decisive plan to thwart the employment of cryptocurrencies for terrorist financing.
The missive, which garnered signatures from 86 bipartisan colleagues, comes in the wake of revelations, including those disclosed by The Wall Street Journal, that the perpetrators behind the recent attack on Israel received substantial sums in cryptocurrency.
“We urge you to swiftly and categorically act to meaningfully curtail illicit crypto activity and protect our national security and that of our allies,” the lawmakers emphasized in their communication.
This development further amplifies the existing apprehensions within Washington regarding the potential exploitation of cryptocurrencies for funding terrorist operations. The Treasury Department, Department of Justice, the Federal Bureau of Investigation, and other experts in national security and law enforcement have consistently cautioned that digital assets are increasingly being employed for money laundering, ransomware attacks, trafficking, and terrorist financing.
The Treasury Department responded on Wednesday by announcing sanctions against the operator of a Gaza Strip-based crypto exchange, along with senior Hamas figures overseeing the group’s financial investments.
Deputy Treasury Secretary Wally Adeyemo stated in a press briefing, “We’re committed to imposing more sanctions alone and in coordination with our partners against Hamas financial network.”
The revelations regarding Hamas’ utilization of crypto for funding have refocused attention on a bill introduced by Warren and Marshall last year. The Digital Asset Anti-Money Laundering Act, if passed, would extend anti-money laundering regulations to the crypto realm. This legislation would enforce know-your-customer requirements, akin to those standard in the banking sector, plug loopholes enabling individuals to bypass anti-money laundering checks, and mandate banks to verify customer and counterparty identities, maintain records, and submit reports on specific transactions involving unhosted wallets.
However, Warren and Marshall are not the sole lawmakers pledging a thorough examination of the cryptocurrency industry following the Israel attack. Senate Banking Committee Chair Sherrod Brown (D-Ohio) has vowed to scrutinize the financial backing behind Hamas’s assaults, including potential involvement of cryptocurrency.
Crypto advocates are resisting this heightened scrutiny, contending that additional anti-money laundering regulations are unnecessary and could drive crypto businesses to relocate abroad.
The industry is concurrently engaged in several other regulatory battles in Washington, contesting with regulators over the framework for overseeing digital assets and advocating for legislation to clarify discrepancies between the rules of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission.
Critics argue that the bill proposed by Warren and Marshall fundamentally clashes with the operational principles of blockchain technology. They assert that the requirements would surpass those imposed on banks, effectively resulting in a de facto ban on crypto in the U.S.
Leading cryptocurrency exchange Coinbase (COIN) has already taken measures to assist the Treasury in tracking Hamas-related activity. The company revealed that it collaborated with the FBI to locate U.S. victims in Israel, but no conclusive leads were found.
Coinbase maintains ongoing partnerships with key law enforcement and government agencies to identify crypto addresses linked to sanctioned parties, preventing users from engaging in transactions with them. The exchange now boasts a database covering over 8 million crypto addresses associated with terrorism financing and other illicit activities.
Chief Legal Officer Paul Grewal emphasized, “Coinbase has been laser-focused on rooting out bad actors seeking to use crypto for illicit purposes. We do all we can- KYC checks, sanctions screening, SAR reporting, strong law enforcement partnerships, you name it- so this doesn’t happen on our platform.” He added, “That’s also why we need sensible crypto legislation passed here in the United States without further delay. We need this industry flourishing in nations committed to the rule of law, not driven to places where human rights and public safety mean much less.”
Source: Yahoo Finance
