Summary
Lawmakers in the House Financial Services Committee expressed concerns about the use of cryptocurrencies for illicit activities during a hearing on Wednesday. The hearing focused on the oversight of the Financial Crimes Enforcement Network (FinCEN) and the Office of Terrorism and Financial Intelligence (TFI). Witnesses at the hearing included FinCEN director Andrea Gacki and TFI undersecretary Brian Nelson. Democratic lawmakers previously cited an article from the Wall Street Journal claiming that Hamas had raised millions of dollars through cryptocurrencies, but crypto analytics firm Elliptic said there was no evidence to support this claim. Nelson noted that the Treasury believes the figure is inflated and that terrorists still prefer to use traditional products and services rather than cryptocurrencies. Treasury officials have stated that cryptocurrencies are becoming a greater threat, but fiat currencies remain the primary tool for money laundering. Lawmakers questioned why the Treasury has not corrected the record on inaccurate figures regarding crypto, to which Nelson responded that his agency releases reports on illicit finance and has been clear about their concerns with cryptocurrencies. The hearing also touched on concerns about the regulation of cryptocurrency mixing services, as FinCEN released proposed rules for such services that many in the industry find problematic.
Key Points
1. Lawmakers and federal agencies are concerned about the role of cryptocurrencies in financing illicit activities and terrorism. There is ongoing debate about the frequency of digital asset usage for these purposes.
2. The Treasury believes that the claim made by the Wall Street Journal about Hamas raising “millions” in crypto is inflated, and that terrorists still prefer to use traditional products and services.
3. The Treasury acknowledges the need to regulate and examine all money services businesses, including cryptocurrencies. There is a call for additional funding for the bureau to tackle new threats posed by digital assets.