US Senators Target Crypto in bill Enforcing Sanctions on Terrorist Groups

US Senators Target Crypto in bill Enforcing Sanctions on Terrorist Groups – A group of bipartisan lawmakers in the U.S. Senate has introduced legislation targeting the use of cryptocurrency in financing terrorism. They specifically referenced the Oct. 7 attack by Hamas on Israel as a motivating factor for the proposed measures. Senator Elizabeth Warren is not spearheading the effort on the bill connecting crypto transactions to terrorism.

Instead, Senators Mitt Romney, Mark Warner, Mike Rounds, and Jack Reed are taking the lead. On December 7, Senators Mitt Romney, Mark Warner, Mike Rounds, and Jack Reed declared the introduction of the Terrorism Financing Prevention Act. The proposed legislation aims to broaden U.S. sanctions to encompass entities funding terrorist organizations using either cryptocurrency or fiat.

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According to Senator Romney, the legislation would allow the U.S. Treasury Department to go after “emerging threats involving digital assets” in the wake of the Oct. 7 attacks as well as actions by the terrorist group Hezbollah. “It is critical that the Department of the Treasury has the necessary counter-terrorism tools to combat modern threats,” said Senator Rounds. 

“The Terrorism Financing Prevention Act takes commonsense steps toward rooting out terrorism by sanctioning foreign financial institutions and foreign digital asset companies that assist them in committing these heinous acts.” Within the 10-page bill, there are clauses enabling the U.S. Treasury to restrict transactions involving a “foreign digital asset transaction facilitator” identified as a sanctioned entity. 

The Office of Foreign Assets Control, under the Treasury, sanctioned a crypto operator based in Gaza on Oct. 18 and expanded its list to include North Korean nationals for utilizing cryptocurrency mixers in money laundering. The senators’ proposed bill emerges amidst a growing number of U.S. lawmakers expressing concerns about crypto’s purported role in financing terrorist groups. 

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In October, around a week following the Hamas attack on Israel, Senator Elizabeth Warren from Massachusetts and over 100 lawmakers signed a letter urging decisive action to “meaningfully curtail illicit crypto activity” supporting such organizations. During a hearing on December 6, Warren asserted that North Korea funded about half of its missile program using the “proceeds of crypto crime.”  In October, the blockchain analytics firm Elliptic reported “no evidence” indicating that Hamas had received a significant volume of crypto donations to finance its attacks. 

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