A bipartisan group of lawmakers, led by Senator Elizabeth Warren, has raised concerns about the role of cryptocurrency in financing terrorism. In a letter addressed to Treasury Under Secretary for Terrorism and Financial Intelligence Brian Nelson and National Security Advisor Jake Sullivan, 28 senators and 76 members of the House of Representatives expressed their worry over the use of cryptocurrency by terrorist groups. The letter referenced a news article that highlighted how Hamas and the Palestinian Islamic Jihad had raised over $130 million in crypto donations between August 2021 and June 2023, with very little money recovered.
The letter emphasized the national security threat that cryptocurrency poses to the United States and its allies, particularly in light of the sophisticated adoption of crypto by Hamas. The lawmakers urged the Biden administration to take decisive action in curbing illicit crypto activity, as Congress considers legislative proposals to mitigate money laundering and illicit finance risks. To gather more information, the letter posed nine questions to the addressees, seeking clarification on the administration’s awareness of terrorist funders, steps being taken to counter crypto-based terrorism financing, and any necessary resources that the administration requires.
This move by Senator Warren and other lawmakers reflects their ongoing stance against cryptocurrencies in the U.S. Congress. Senator Warren had already introduced the Digital Asset Anti-Money Laundering Act in December, which was later reintroduced in the current Congress. The bill had been gaining support prior to the conflict between Israel and Hamas, and the recent hostilities have further strengthened the allies of Senator Warren in this regard.
The letter bears the signatures of other prominent anti-crypto legislators, including Roger Marshall and Sean Casten. Notably, Senate Banking Committee chair Sherrod Brown, who has shown support for crypto regulation but did not endorse Warren’s bill, also signed the letter. However, some crypto advocates, such as Cynthia Lummis, Kirsten Gillibrand, and Patrick McHenry, did not sign the letter. It is worth mentioning that several signers had no prior record on crypto, while others, like Jake Auchincloss and Josh Gottheimer, had previously voted in favor of pro-crypto measures.
In response to these concerns, the Treasury Department released Nelson’s prepared remarks for a Deloitte Anti-Money Laundering conference. Nelson highlighted the unique resources and well-established methods of Hamas in accessing the formal financial system. He referred to the use of secret financial portfolios, shell companies, fake philanthropies, and racketeering. The Treasury’s Office of Foreign Assets Control also announced sanctions against a Gaza-based virtual currency exchange and its operator, along with several other Hamas collaborators.
The scrutiny on cryptocurrency’s role in funding terrorism continues to grow, with bipartisan support for addressing this issue. As lawmakers and regulators grapple with the complexities of the crypto landscape, the need to strike a balance between innovation and security remains of utmost importance. The letter signed by Senator Warren and her colleagues highlights their determination to tackle illicit crypto activities and safeguard national security, prompting further discussions on the regulation of cryptocurrencies in the United States.