A Senate Banking Committee hearing focused on illicit finance and terrorism provided a window into how lawmakers plan to craft potential legislation focused on digital assets.
Senators expressed concerns about the use of digital assets by malicious actors, which has been a source of controversy over the past year, during a hearing Tuesday titled “Treasury Update: Response to Illicit Finance, Terrorism and Sanctions Evasion.”
“All the bad actors — North Korea, Russia, terrorist groups like Hamas — are turning to cryptocurrencies because they’ve seen the advertising and bought into the hype,” Senate Banking Committee Chairman Sherrod Brown of Ohio said Tuesday. “They’re using it because they know it’s a workaround. They know it’s easier to move money in the shadows without safeguards like know-your-customer rules or suspicious transaction reporting.”
Brown, who will play a key role in advancing cryptocurrency legislation, said he is discussing the following bills: Past reports have suggested it will target the use of digital assets for money laundering. Politico. Both Democrats and Republicans in the House and Senate have been working on illicit finance provisions and legislation over the past year, but their approaches are different.
The cryptocurrency industry assert Citing research from blockchain forensics company Chainalytic, the role of digital assets in illicit finance is a small percentage of the overall pie.
“We need to ensure that cryptocurrency platforms follow the same rules as other financial institutions,” Brown added. “We need to make sure we have the tools in place to crack down on illicit finance with digital assets like we do with any other asset.”
Treasury asks
Testifying at the hearing, U.S. Deputy Secretary of the Treasury Wally Adeyemo asked lawmakers the following question: reforminclude Introducing secondary sanctions tools, modernizing and addressing gaps in existing authorities and addressing jurisdictional risks for foreign cryptocurrency platforms.
In his prepared testimony, Adeyemo said terrorist groups are trying to use cryptocurrencies, just as groups like Al Qaeda and Hamas are using cryptocurrencies to solicit donations. Other countries, such as North Korea and Russia, have also leveraged cryptocurrencies, with Russia specifically turning to stablecoins like Tether to “finance its war machine,” Adeyemo said.
Adeyemo told lawmakers on Tuesday that as the Treasury Department continues sanctions against terrorist groups like Hamas, these groups will likely move to less traditional means, including cryptocurrencies.
Lawmakers ask questions
Lawmakers questioned Adeyemo in detail about what cryptocurrency-related tools the Treasury Department needs and how the department plans to bring digital assets into compliance.
“I think we can all agree that more work needs to be done to update and clarify the digital asset regulatory framework,” said Sen. Robert Menendez, D-N.J. “However, this does not and should not exempt service providers from complying with existing laws.”
Menendez’s comments come after cryptocurrency exchange Binance and its former CEO Changpeng Zhao. recognize This is a violation of the Anti-Money Laundering Act. The New Jersey Democrat asked Adeyemo what the Treasury Department plans to do to “strengthen enforcement.”
Senator Thom Tillis announces discussion on cryptocurrency illicit finance draft It argued on Monday that regulations must be put in place to curb digital assets.
“One thing I will tell people in the cryptocurrency or digital asset space is, ‘There’s nothing to see here, everything is fine,’ and they’re wrong,” the North Carolina Republican said. “We need to put in place a light regulatory framework,” he said.
Tillis called for a “friendly environment” for digital assets and asked Adeyemo about the problems that could arise when applying the “old kind of banking structures” of KYC and AML to digital assets.
“From your perspective, I think we need to take a differentiated approach depending on the type of tool. That’s why, under our proposal, we will also use it in a risk-based manner,” Adeyemo said.
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