U.S. Senate’s Banking Chairman Says Panel to ‘Crack Down’ on Crypto’s Terrorism Ties

U.S. Sen. Sherrod Brown (D-Ohio), chairman of the Senate Banking Committee, has said the panel will “crack down on the use of crypto to fund terrorism and evade sanctions” at a time when the U.S. must stand with both Ukraine and Israel as “they fight back against Russian President Vladimir Putin and Iranian-backed terrorists like Hamas.”

“On this committee, we have a unique role to play, working to understand the financing behind Hamas’s attacks, so we can work to cut off funding for terrorism at its source … and we will examine multiple terrorist funding streams, including cryptocurrency, and consider additional measures to stop the flow of those funds,” Brown, who has an outsized role in crypto policy-making, said in opening remarks at a hearing Thursday on illicit finance.

Reports about the role of crypto in the Israel-Hamas conflict misinterpreted and hugely exaggerated data, according to blockchain analytical firm Elliptic. Chainalysis, a rival analytics firm, made a similar statement earlier last week.

On October 16, The Wall Street Journal linked Hamas with tens of millions in crypto donations. But Elliptic said this week that, while Hamas “has begun to experiment” with digital-asset fundraising, “the amounts raised remain tiny compared to other funding sources.”

The WSJ’s apparently erroneous reporting has prompted many crypto proponents to ask the WSJ for a retraction of its reporting. Iran is the main sponsor of Palestinian terror groups currently at war with Israel.

Senator Brown mentioned Senator Elizabeth Warren, among others, from more than 100 U.S. lawmakers, who leaned into those reports in a major response to further justify her legislative push to go after money laundering and sanctions abuses in crypto.

“Last week, Senator Warren and I, along with more than 100 of our colleagues of both parties, wrote to the Administration to voice our concerns about these issues,” Brown said.

“I’m glad that members of this committee … have put forward bipartisan plans for closing gaps around digital assets in our illicit finance rules. We’ll work together on this committee, in a bipartisan way, to make sure terrorists and bad actors can’t exploit crypto.”

Warren’s office didn’t respond to an earlier CoinDesk request for comment after the Blockchain Innovation Project – led by two former members of Congress, David McIntosh, an Indiana Republican, and Tim Ryan, an Ohio Democrat – sent a letter to the Massachusetts senator and others to counter the lawmakers’ recent claims.

Crypto platforms have too often not used common sense protections “that keep illicit money out of the traditional banking system,” Brown said.

And he said last week’s steps taken by the U.S. Treasury to sanction several individuals and entities allegedly supporting Hamas terrorist operations, including a Gaza-based exchange, are not enough.“

“The administration must take additional steps to impose sanctions and dedicate resources toward a multilateral effort to coordinate with allies to track, freeze, and seize any Hamas-related assets, and take steps necessary to deny Hamas terrorists the ability to raise funds,” he added.

Attempts to block crypto funding for terrorism often become a game of whack-a-mole, Brown said, because law enforcement may stop one transaction but criminals move to another platform, with another alias. “Terrorists know they can use crypto in ways they could never use dollars.”

UPDATE 10/26/23; 16:40 UTC: This story was updated with additional comments from Sherrod Brown.