The US House Financial Services Subcommittee wants answers about crypto and crime

The United States House Financial Services Subcommittee on Digital Assets, Financial Technology, and Inclusion held a hearing on the use of blockchain technology in a hearing titled “Cryptocrime in the Context of Disrupting Illegal Activity in Digital Assets” on November 15. The hearing was bipartisan in nature, as Chairman Frank Hill said in his introduction.

Hill began by quoting an October 10 Wall Street Journal article about the use of Hamas as a fundraiser. The article was amended on October 27 to reflect more accurate data produced by blockchain analytics firm Elliptic, as Hill noted. He continued:

“Phones and the Internet are not responsible for terrorist financing, and neither should crypto.”

Similarly, Stephen Lynch, a ranking member of the subcommittee, said he hopes “we can put aside some of the assumptions that some people may have.”

The panel of witnesses included representatives from Consensus and Chinalysis, as well as forensic experts and senior counsel from law firm Hogan Lovells. He spoke of the need for international cooperation and public-private cooperation to stop the misuse of digital assets, the need for well-developed laws and the complexity of blockchain sleuthing.

Representative Brad Sherman asked Allison Jimenez, president of Dynamic Securities Analytics, for an example of a legitimate use of crypto-mixing, which she was unable to provide.

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Many other voices on this topic wanted to be heard at the same time. Hill, Representative Tom Emmer, Financial Services Committee Chairman Patrick McHenry and Representative Richie Torres were the lead signatories of a bipartisan group of 53 additional House members, to US President Joe Biden and Treasury Secretary Janet Yellen on November 15.

The letter requested information about Hamas and Palestinian Islamic Jihad's fundraising and the role of cryptocurrency in its efforts. The letter says:

“It is important to understand the scope of Hamas' digital assets fundraising campaign in light of its traditional fundraising activities.”

He went on to say that traditional fundraising methods “may far exceed” the revenue generated through crypto, and Congress needs help “in understanding the scale, scope and duration of Hamas's digital asset fundraising campaign, as well as accurate information about blocked or discarded digital assets obtained from terrorist organizations.”

The letter cites the same Wall Street Journal article. In the year On November 12, WSJ published a second article by the same authors on the use of crypto to channel money to Hamas.

Also on November 15, the Blockchain Association issued an open letter to Hill and other members of the Financial Services Committee. That letter was signed by 40 former members of the US military, intelligence officers and national security experts who are now affiliated with digital assets companies or venture capital.

#HappeningNow: Chairman @RepFrenchHill convenes the Subcommittee on Digital Assets, Financial Technology & Inclusion for a hearing titled “Cryptocrime in Context: Dismantling Illegal Activity in Digital Assets.”

Check out the live stream pic.twitter.com/Wfrz90FdVR

— Financial Services GOP (@FinancialCmte) November 15, 2023

They cited an earlier WSJ article saying they were concerned that the “grossly exaggerated” and “redacted” clause “continues to be used to push legislation against America's national security interests.”

Encouraging the growth of a regulated, compliant digital assets industry in the United States is the best way to root out bad actors, the letter continued.

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