United States senators have targeted crypto to enforce sanctions against terrorist groups

A bipartisan group of lawmakers in the United States Senate has introduced legislation to challenge the role of cryptocurrencies in financing terrorism, with explicit references to the October 7 attacks on Israel by Hamas.

In a Dec. 7 announcement, Senators Mitt Romney, Mark Warner, Mike Round and Jack Reed introduced the Terrorist Financing Prevention Act. The bill expands U.S. sanctions to include parties that finance terrorist organizations with cryptocurrency or fiat. According to Senator Romney, the law allows the US Treasury Department to go to “emergencies related to digital assets” following the October 7 attack and the actions taken by the terrorist group Hezbollah.

“It is imperative that the Treasury Department has the counterterrorism tools necessary to combat modern threats,” said Senator Rounds. “The Prevention of Terrorism Financing Act takes reasonable steps to tackle terrorism at its root by banning foreign financial institutions and foreign digital asset companies that facilitate these offensive activities.”

Hamas' attacks on Israel have required the United States to defend the role crypto plays in financing terrorism. Our bipartisan bill expands sanctions on all terrorist organizations, including Hamas, and addresses threats related to digital assets.https://t.co/MO1AnobhCg

— Senator Mitt Romney (@SenatorRomney) December 7, 2023

The 10-page bill includes provisions that would allow the US Treasury to block transactions with “foreign digital asset transaction facilitators” listed as part of the sanctions. The Treasury's Office of Foreign Assets Control imposed sanctions on a Gaza-based crypto operator on Oct. 18, adding it to a list of North Korean nationals using cryptocurrency mixers to launder their money.

Related: Terrorist Fundraising: Is Crypto Really to Blame?

The senators' proposed bill comes after several US lawmakers have been outspoken about crypto's alleged role in funding terrorist groups. About a week after Hamas attacked Israel in October, Senator Elizabeth Warren and more than 100 lawmakers signed a letter calling for action to “effectively curb illegal crypto activity” that funds such organizations.

Warren said in a Dec. 6 hearing that North Korea financed about half of its missile program using “crypto-crime processing.” Blockchain analytics firm Elliptic reported in October that there is “no evidence” that Hamas has received large amounts of crypto donations to fund its attacks.

Magazine: Legislators' fear and skepticism fuel proposed crypto regulations in the US.