Elizabeth Warren’s bill ‘wouldn’t do anything’ to stop terrorist financing in crypto — US lawmaker

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United States Representative French Hill, chair of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, has challenged an aspect of Senator Elizabeth Warren’s proposed bill on digital assets.

In a Feb. 15 hearing focusing on “Crypto Crime in Context,” Representative Hill and other U.S. lawmakers questioned experts from the crypto space on making digital asset miners and validators subject to similar regulations currently applied to financial institutions. Senator Warren’s bill, the Digital Asset Anti-Money Laundering Act, proposes modifying the Bank Secrecy Act to apply new standards to crypto providers to combat the financing of terrorist organizations.

Representative Hill implied that changing the requirements for miners and validators “wouldn’t do anything” to stop terrorist organizations’ use of crypto. He did not explicitly mention the Massachusetts enator’s bill. According to Arktouros co-founder Michael Mosier, also a former acting director for the Financial Crimes Enforcement Network, the overwhelming majority of illicit financing in crypto goes through centralized exchanges.

“Miners and validators are essentially producing blocks and verifying blocks, and they’re operating like an internet service provider,” said Mosier. “That’s not something that we would subject to [Know Your Customer] in the sense that it’s just data being processed.”

Mosier added:

“There is no customer to a validator or a miner — it’s mathematical processing. Those are random. They can’t select them.”

The hearing was the House committee’s second in the last four months addressing the illicit uses of cryptocurrency, focusing on the financing of terrorism. Representative Patrick McHenry, who chairs the full committee, announced in December that he will not run for reelection in 2024, with leadership potentially falling into either the hands of Democrats or Republicans depending on the outcome of the election.

Related: Blockchain Association calls out Elizabeth Warren’s legislation on digital assets

Following the Oct. 7 attack by Hamas on Israel, the issue of crypto financing terrorism has received growing calls for action in the U.S. government, with many supporting Senator Warren’s proposed bill. Chainalysis reported on Feb. 15 that the volume of cryptocurrency transactions linked to illicit activities dropped by more than 29% from 2022 to 2023 — from $31.5 billion to $22.2 billion.

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