The U.S. Treasury Department has signaled an urgent call for expanded legislative powers to oversee cryptocurrency transactions. A recent examination has revealed that financial institutions reported a suspected $165 million in cryptocurrency-linked activity potentially connected to the militant group Hamas. This analysis was based on suspicious activity reports collected from January 2020 through October 2023. Deputy Treasury Secretary Wally Adeyemo has emphasized the urgent need for enhanced regulatory measures.
Legislative Support Sought for Enhanced Surveillance
Adeyemo’s communication to the U.S. Senate Banking and House Financial Services Committees highlights the importance of legislative support to address the terrorism financing risks related to cryptocurrency transactions. The reported $165 million figure by FinCEN might not wholly represent cryptocurrency transactions, as financial institutions could be including entire customer transaction values, combining fiat and crypto activities.
During its probe, FinCEN identified over 200 digital currency addresses that could be linked to these suspicious activities, revealing the extent of scrutiny into the illicit use of cryptocurrencies. Although terrorists generally show a preference for conventional financial channels, their increasing interest in cryptocurrencies due to restrictions on traditional finance poses a significant concern.
Spiking Concerns After Hamas-Israel Escalation
The Treasury’s quest for additional authority coincides with heightened vigilance from U.S. legislators, particularly after a Hamas-initiated offensive against Israel last October. This conflict, which inflicted considerable damages and sparked a humanitarian challenge in Gaza, raised alarms over the potential use of cryptocurrencies in funding terrorist endeavors. Consequently, U.S. lawmakers have been advocating for enhanced transparency and regulation of cryptocurrency transactions.
In his letter, Adeyemo reiterates the Treasury Department’s dedication to revamping its regulatory framework to counter new threats arising in the digital currency sphere. The proposed legislative changes are designed to more clearly define the scope of crypto entities and empower the Treasury’s Office of Foreign Assets Control (OFAC) to levy sanctions on crypto businesses engaged with entities under sanction.
