Crypto Advocacy Groups Challenge Lawmakers' Claims Linking Digital Assets to Terrorism Financing
Summary:
U.S-based cryptocurrency advocacy groups are challenging allegations by Senator Elizabeth Warren and over 100 other legislators that cryptocurrencies are used to fund terrorism groups such as Hamas. The contested op-ed, written by Warren and Sen. Roger Marshall, claims that "crypto-financed terrorism" endangers U.S. citizens by financing such groups and illegal drug production. Advocates argue that their proposed solutions, including Know Your Customer (KYC) rules, wouldn't address activities outside U.S. jurisdictions. They point out that blockchain technology makes transactions public allowing for potential tracing of criminal activities. This challenge occurs amid a political back-and-forth in the U.S. Congress, the outcome of which remains uncertain.
Cryptocurrency advocacy groups in the United States are publicly challenging Senator Elizabeth Warren and other politicians for allegations made about the terrorist organization, Hamas, potentially funding their activities through digital currencies. On October 17, a letter signed by Warren and more than a hundred other legislators demanded initiatives to significantly restrain unlawful cryptocurrency practice associated with financing Hamas and the Palestinian Islamic Jihad following an attack on Israelis.
Warren, the senator from Massachusetts who is a well-known critic of cryptocurrencies within the U.S Congress, published an op-ed piece within the Wall Street Journal alongside Senator Roger Marshall on October 18. They argued that by funding illicit entities and the production of unlawful drugs, “crypto-financed terrorism” posed a risk to American citizens.
However, Yaya Fanusie, who is the director of anti-money laundering for the Crypto Council for Innovation, countered that the solution suggested by Warren would fail to address issues beyond the jurisdiction of the U.S. Warren’s proposed bill, the Digital Asset Anti-Money Laundering Act, was designed to apply the same safeguarding measures that protect traditional payment systems to cryptocurrencies.
“They proposed KYC [Know Your Customer] regulations, which is similar to demanding copy machine producers conduct KYC on everyone who uses their copiers,” Fanusie said. He asserted that “they [Warren and Marshall] sadly do not realize that underlying blockchain technology actually makes transactions public, providing investigators with a digital record to identify terrorist operatives and their financial contributors.”
The Blockchain Association echoed this perspective in an October 18 thread on X, the platform formerly known as Twitter. The association indicated reports from earlier in the year that had shown Hamas groups had ceased using Bitcoin (BTC) to support terrorism. This was reportedly due to authorities' enhanced ability to trace these funds.
“These proposals [Crypto-Asset National Security Enhancement and Enforcement and Digital Asset Anti-Money Laundering Act] will only penalize law-abiding U.S-based users and drive all industry participants towards jurisdictions beyond the reach of U.S law enforcement,” the Blockchain Association stated.
Following an October 7 Hamas attack that resulted in several Israeli casualties, sanctions were imposed by the U.S. Treasury’s Office of Foreign Assets Control and an op-ed authored by Senator Warren. In response, Israel declared war on the terrorist group and launched attacks against Gaza, causing a humanitarian crisis that impacted hundreds of thousands of individuals.
U.S. legislators, including Senator Warren, have occasionally associated cryptocurrency with international crisis, including digital currencies being used to bypass sanctions on Russia following its attack on Ukraine. Warren had previously been a vocal critic of the purported role of cryptocurrency in the production of the drug fentanyl and other illegal activities.
Fanusie further suggested, “Instead of politicizing this issue, [Sens. Warren and Marshall] should better support the talented and deeply knowledgeable individuals across various agencies who could use extra resources to aid in tracking down the offenders.”
Currently, it remains uncertain whether any of Senator Warren's proposed bills will be able to progress through Congress, given the inability of Republican representatives to agree on a new Speaker. After the position of Speaker Kevin McCarthy became vacant on October 4, pro-cryptocurrency legislator and House Financial Services Committee chair Patrick McHenry has been serving as the temporary Speaker.
Published At
10/19/2023 4:26:04 PM
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