The evolving use of cryptocurrencies for illicit purposes necessitates additional oversight tools for the US Treasury. This was stated by Deputy Secretary Wally Adeyemo during a Senate hearing.
The official mentioned a network operated by Al-Qaeda for several years to raise funds in bitcoin via social media, and cryptocurrency donations to Hamas.
“It is important to understand that [illicit actors] will increasingly use cryptocurrencies and virtual assets to move funds, given our inability to stop them and the lack of tools,” Adeyemo said.
According to him, the Department requires additional means to enforce secondary sanctions.
The official also urged the adoption of legislation to expand the Department’s role in the “digital asset ecosystem,” as well as rules to address jurisdictional issues for regulating foreign industry companies.
“It’s not just Hamas and terrorists using cryptocurrency financing. North Korean ransomware gangs, drug traffickers, distributors of child sexual abuse material, add your own bad guy. Cryptocurrency is a way for them to move money,” stated Democratic Senator Elizabeth Warren.
Banking Committee Chairman Sherrod Brown noted that wrongdoers use cryptocurrencies as a workaround without any safeguards like KYC procedures or suspicious transaction reports.
“We must ensure that crypto platforms operate under the same rules as other financial institutions. We need to be confident that we have the tools to combat illicit financing through digital assets,” added the head of the Senate body.
Meanwhile, Republican Tim Scott suggested that Democratic colleagues exaggerate the scale of illegal activities in cryptocurrencies, turning them into “scapegoats.”
In October 2023, Chainalysis analysts noted that many mistakenly include unrelated assets in funds associated with terrorists.
Experts from Elliptic also pointed out the overestimation of the scale of illicit financing in cryptocurrencies.