US House Financial Services subcommittee looks for answers on crypto and crime
Reports on crypto funding terrorism and blockchain forensics were confusing, but everyone agreed on the need for collaboration and regulation.
The United States House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion received an education in the uses of blockchain technology in a hearing entitled “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets” on Nov. 15. The hearing was bipartisan in nature, chair French Hill stated at the outset.
Hill began the meeting by citing an article published by The Wall Street Journal on Oct. 10 on the use of crypto by Hamas for fundraising. The article was corrected on Oct. 27 to reflect more accurately crucial data produced by blockchain analytics firm Elliptic, as Hill also mentioned. He continued:
“Phone and the internet aren’t to be blamed for terror financing and crypto shouldn’t either.”
In a similar vein, subcommittee ranking member Stephen Lynch stated the hope that “we can put aside some of the preconceived notions some may have.”
The panel of witnesses included representatives of ConsenSys and Chainalysis, as well as forensic experts and a senior counsel from law firm Hogan Lovells. They spoke about the need for international collaboration and public-private collaboration in stopping the misuse of digital assets, the need for well crafted legislation and the intricacies of blockchain sleuthing.
Rep. Brad Sherman asked Dynamic Securities Analytics President Alison Jimenez for an example of a licit use of a crypto mixer, which she was unable to provide.
Related: Israeli authorities seize crypto from terror organizations, credit new technology
Plenty of other voices wanted to be heard at the same time on this topic. Hill, Rep. Tom Emmer, Financial Services Committee chair Patrick McHenry and Rep. Ritchie Torres were lead signers along with a bipartisan group of 53 more House members of a letter to U.S. President Joe Biden and Treasury Secretary Janet Yellen on Nov. 15.
The letter requested information on Hamas and Palestinian Islamic Jihad fundraising and the role of cryptocurrency in its efforts. The letter stated:
“It is important to understand the scope of Hamas’s digital assets fundraising campaign in the context of its traditional funding activities.”
It went on to say that traditional fundraising methods “could far exceed” the revenue brought in through crypto, and Congress needs assistance “understanding the size, scope, and duration of Hamas’s digital asset fundraising campaign, as well as accurate information on blocked or forfeited digital assets from terrorist organizations.”
The letter cites the same Wall Street Journal article. On Nov. 12, the WSJ published a second article by the same authors on the use of crypto to funnel money to Hamas.
Also on Nov. 15, the Blockchain Association released an open letter to Hill and other members of the Financial Services Committee. That letter was signed by 40 former members of the U.S. military, intelligence officers and national security professionals who now have links to digital assets companies or venture capital.
#HappeningNow: Chairman @RepFrenchHill convenes the Digital Assets, Financial Technology and Inclusion Subcommittee for a hearing entitled “Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets.”
Watch Live https://t.co/r2ydRRrWvp pic.twitter.com/Wfrz90FdVR
— Financial Services GOP (@FinancialCmte) November 15, 2023
They too mentioned the earlier WSJ article, saying they were concerned that the “grossly overstated” and “debunked” article “continues to be used to push legislation that would be counterproductive to U.S. national security interests.”
Encouraging the growth of a regulated, compliant digital asset industry in the United States is the best way to root out bad actors, the letter continued.
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