US Crypto Advocacy Groups Criticize Senator Elizabeth Warren for Claims on Crypto Financing Terrorism
Several crypto advocacy organizations in the United States are challenging Senator Elizabeth Warren and other lawmakers over their claims about the connection between terrorist group Hamas and cryptocurrency financing. Warren and over 100 lawmakers signed a letter on October 17, calling for action to curtail illicit crypto activities used for funding Hamas and the Palestinian Islamic Jihad. In an op-ed published in The Wall Street Journal on October 18, Warren claimed that “crypto-financed terrorism” endangers US citizens. However, Yaya Fanusie, director of anti-money laundering at the Crypto Council for Innovation, argued that Warren’s proposed solution would not address issues occurring outside US jurisdictions.
The Limitations of KYC Rules
Fanusie criticized Warren’s proposal, stating that implementing Know Your Customer (KYC) rules for cryptocurrencies is similar to suggesting that copy machine manufacturers should KYC anyone using their copiers. He pointed out that the underlying blockchain technology makes transactions public, providing investigators with a digital paper trail to identify terrorist operatives and their financial contributors. The Blockchain Association (BA) echoed these sentiments, emphasizing that only a small fraction of Hamas’s funding has come from crypto, and it remains unclear how terrorists benefited from those funds in recent attacks on Israel.
Proposed Bills May Have Negative Consequences
The BA warned that the proposed bills, including the Digital Asset Anti-Money Laundering Act, will punish law-abiding US-based users and push industry actors to other jurisdictions outside the reach of US law enforcement. The BA urged lawmakers to support agencies by providing extra resources to track down bad actors rather than politicizing the issue. It also emphasized the importance of proactive steps to equip law enforcement and national security officials with tools, training, expertise, and information to combat illicit activity, including in the crypto space.
Uncertainty Surrounding Proposed Bills
At the time of publication, it remained uncertain whether any of Warren’s suggested bills would be able to move through Congress due to Republican members of the House of Representatives being unable to unite behind voting in a new Speaker. Pro-crypto lawmaker and House Financial Services Committee chair Patrick McHenry has been acting as interim Speaker since Speaker Kevin McCarthy’s position was declared vacant on October 4.
Hot Take: Senator Warren’s Claims on Crypto Financing Terrorism Challenged by Advocacy Groups
Crypto advocacy organizations in the US are pushing back against Senator Elizabeth Warren and other lawmakers over their assertions that cryptocurrencies are financing terrorism. They argue that implementing KYC rules for cryptocurrencies would not address issues occurring outside US jurisdictions and that blockchain technology actually aids investigators in tracking transactions. The Blockchain Association also pointed out that only a small fraction of Hamas’s funding comes from crypto, and it remains unclear how terrorists benefit from these funds. The proposed bills have raised concerns about punishing law-abiding users and pushing industry actors to other jurisdictions. It is unclear if these bills will progress through Congress due to political challenges.
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