U.S. Senate Reviews Bipartisan Bill Against Crypto Terror Financing

• Bipartisan Senators Propose Legislation to Thwart Terror Financing Through Crypto
• Introduction of the Terrorist Financing Prevention Act of 2023
• Addressing the Role of Crypto in Terrorism Financing
• Disputed Role of Crypto in Financing Terrorism
• No Substantial Proof of Significant Crypto Donations to Hamas
• Crypto Use by Designated Terror Organizations

Bipartisan Senators Propose Legislation to Thwart Terror Financing Through Crypto

A bipartisan group of senators has tabled legislation aimed at curbing terror financing facilitated by digital assets. The effectiveness of cryptocurrency in terror financing is still under debate, given that it represents a relatively insignificant portion compared to conventional methods.

Introduction of the Terrorist Financing Prevention Act of 2023

Senators, including Mitt Romney (R-UT), have put forth a bill to extend sanctions to foreign bodies supporting all U.S.-designated terrorist groups, including those utilizing crypto transactions, thereby providing law enforcement with augmented tools to combat terror financing.

The Terrorist Financing Prevention Act of 2023 seeks to bar Foreign Terrorist Organizations and their financial backers, especially those deploying digital assets, from accessing U.S. financial institutions. This will be achieved through the imposition of sanctions and stringent regulations to counteract such activities, according to the proposed bill.

The prospective act expands current sanctions, initially focused on Hezbollah, to encompass all U.S.-designated foreign terrorist organizations and their supporting foreign entities.

Addressing the Role of Crypto in Terrorism Financing

Romney highlighted the urgency and necessity of addressing the role of cryptocurrency in terrorism financing in light of the October 7 attacks on Israel by Hamas. The proposed legislation aims to expand financial sanctions to cover all terrorist organizations, including Hamas. It would further enhance the capability of the Treasury Department to combat terrorism and address emerging threats involving digital assets.

Disputed Role of Crypto in Financing Terrorism

The issue of crypto used in funding terror activities has been a longstanding concern for regulators and law enforcement. In a recent debate among Republican presidential candidates, Vivek Ramaswamy, a staunch supporter of cryptocurrency, was questioned about the use of digital assets by fraudsters, criminals, and terrorists.

The discourse on crypto's involvement in terrorism financing stems from a Wall Street Journal report alleging substantial crypto funds received by Palestinian groups. However, it remains a contentious issue with blockchain analytics firms like Chainalysis suggesting these claims may be overstated.

No Substantial Proof of Significant Crypto Donations to Hamas

Blockchain security company, Elliptic, recently reported that there is no substantial evidence supporting claims of significant crypto donations to Hamas. It suggests that such allegations are likely exaggerated.

The traceability of the blockchain and the intricacy of monitoring tools mean that fund flows can be tracked and frozen. Binance, the world's largest crypto exchange, has frozen more than 100 accounts suspected of links to Hamas as per Israeli law enforcement's request since the Oct. 7 attacks. Furthermore, as early as April, the military wing of Hamas ceased accepting crypto donations to safeguard its supporters.

Crypto Use by Designated Terror Organizations

Hamas and Hezbollah, both classified as terror organizations by the U.S. and various other global jurisdictions, are increasingly using the Tron blockchain over Bitcoin$42,260 -0.64%. However, the seized funds total less than 150 wallets and around $130 million. By contrast, publicly disclosed intelligence reports suggest that Hamas generates $1 billion annually, with $500 million originating from tax revenue and approximately $100 million from Iran.

Edited by Jonathan Stoker