A bipartisan group of U.S. senators, led by Mitt Romney (R-UT), introduced legislation. It gives law enforcement another tool to combat crypto terrorism funding. It would extend sanctions to foreign entities that support all U.S.-designated terrorist groups.
“The Terrorist Financing Prevention Act of 2023, aims to prevent Foreign Terrorist Organizations and their financial enablers. It includes those using digital assets, from accessing U.S. financial institutions, imposing sanctions and strict regulations to counteract these activities. The proposed act broadens current sanctions, which were initially targeted at Hezbollah. It aims to include all US-designated foreign terrorist organisations and foreign entities that support them.
The US Treasury Will Block Sanctioned Cryptocurrency Entities
The bill includes provisions that would allow the US Treasury to prohibit transactions with sanctioned foreign digital asset transaction facilitators. This is a proactive step toward reducing the use of digital currencies for malicious purposes. Previously, on October 18, the Treasury’s Office of Foreign Assets Control sanctioned a Gaza-based cryptocurrency operator. It has also targeted North Korean nationals for crypto terrorism funding.
The introduction of this bill coincides with the concerns expressed by several US lawmakers, including Senator Elizabeth Warren. It talks about the potential role of cryptocurrencies in terrorist financing. Following the Hamas attack in October, Warren and more than 100 lawmakers called for decisive action. They want to curb illicit crypto activities linked to terrorist funding.
While the bill reflects a concerted effort to combat terrorist financing, it also sparks a balanced discussion about the use of cryptocurrencies. Elliptic, a blockchain analytics firm, reported in October that there was no substantial evidence to suggest that Hamas received a significant volume of cryptocurrency donations to fund its attacks.
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Disputed Role in Terrorism Financing
Regulators and law enforcement have long been concerned about crypto terrorism funding. In the most recent Republican presidential debate, Vivek Ramaswamy, who has made crypto support a cornerstone of his campaign, was asked a question that framed digital assets as a tool for “fraudsters, criminals, and terrorists.”
The debate over whether crypto funds terrorism, sparked by a Wall Street Journal report claiming Palestinian groups received significant funds in crypto, is complex and unresolved, with blockchain analytics firms like Chainalysis claiming such claims are likely exaggerated, CoinDesk recently reported. According to a recent post by blockchain security firm Elliptic, there is no substantial evidence supporting significant crypto donations to Hamas, and analysis suggests such donations.
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