2 months ago
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The US Treasury Department is intensifying its efforts to regulate crypto transactions linked to terrorist organizations, notably Hamas, as it seeks to address national security risks associated with virtual assets.
According to a recent Bloomberg report, Treasury officials revealed they are investigating approximately $165 million in cryptocurrency transactions believed to support Hamas, a group designated as a terrorist organization by the US government.
Risks Of Crypto Allegedly Used By Hamas
In a two-page letter, Deputy Treasury Secretary Wally Adeyemo urged Congress to approve new authorities to bolster oversight of digital currencies.
The letter, released in response to a Freedom of Information Act (FOIA) request, provides insight into the Treasury’s ongoing concerns about the potential for crypto to be used in illicit financing.
Adeyemo noted that while Hamas and similar groups still predominantly rely on traditional financial systems, there is a growing apprehension that they may increasingly turn to cryptocurrencies as access to conventional financial products is restricted.
Among the proposals, Adeyemo suggested granting the Treasury’s Office of Foreign Assets Control (OFAC) the authority to impose secondary sanctions on virtual asset firms that engage with sanctioned entities. This aims to increase the government’s ability to combat money laundering and terrorism financing through digital currencies.
Adeyemo emphasized the need for enhanced regulatory powers to combat the evolving threats posed by virtual assets, he said:
The Treasury needs to modernize its arsenal to take on crypto exchanges that offer services in the US while also operating in jurisdictions with weak or non-existent rules regarding sanctions, money laundering, and terrorism funding.
Adeyemo Urges Congress To Enhance Regulatory Powers
However, Riot’s Director of Public Policy Sam Lyman has previously argued that mainstream reports often overlook critical details that portray cryptocurrencies not only as tools for terrorism but also as potential obstacles for such organizations.
Lyman claims that Hamas has even advised its supporters against using Bitcoin or any other crypto for donations, citing the transparent nature of blockchain technology. “Why?” Lyman explained. “Because the transparent nature of the blockchain had Western intelligence following their every transaction like bloodhounds.”
This transparency, Lyman argues, makes it difficult for groups like Hamas to effectively use Bitcoin without drawing unwanted attention. He characterized money laundering through Bitcoin as “a classically dumb crime,” emphasizing that the visibility of transactions can spotlight those involved.
As seen in the chart below, the donations show that Hamas has experienced a decline in digital asset donations since late 2022 and early 2023, with BTC being the primary cryptocurrency used.
Drop in BTC donations received by terrorist organizations from 2021 and 2023. Source: Elliptic
This decline suggests that law enforcement agencies have been effective in tracking down these funds, further complicating the operational capabilities of terrorist organizations.
Ultimately, it remains to be seen whether these increased regulatory powers asked by Adeyemo can pass Congress, as the digital asset ecosystem has played a notable role in the upcoming US presidential election, which could mark a notable shift under a potential Trump return to the White House.
Featured image from DALL-E, chart from TradingView.com
