“Hamas, known for its illicit funding methods, recently experienced a harsh reality check when their Bitcoin accounts were traced and frozen. This raises the question: Can senators, notorious for their lack of digital literacy, grasp the potential implications of cryptocurrencies?”
After Hamas’s failed attempt to use bitcoin for financing its operations, it is clear that the idea of bitcoin providing a safe space for criminals and terrorists is a misconception. Hamas believed that by using bitcoin, it could bypass Western surveillance and international sanctions. However, Israeli law enforcement successfully located and froze multiple cryptocurrency accounts used by Hamas to solicit donations.
The open and transparent nature of the bitcoin blockchain allows intelligence agencies to track transactions in real time with unprecedented speed and precision. Every transaction made using bitcoin is permanently recorded on the blockchain, making it easy for law enforcement to connect transactions with wallets and identities.
Contrary to popular belief, illicit activity makes up a very small fraction of cryptocurrency transactions, accounting for only about one quarter of one percent. In comparison, the percentage of fiat currency transactions attributed to money laundering and illicit activities is much higher, according to United Nations data.
Despite these facts, some lawmakers, such as Senator Elizabeth Warren, continue to demonize cryptocurrency and propose unnecessary regulations. Warren’s bill, the Digital Asset Anti-Money Laundering Act, aims to classify crypto industry participants as financial institutions, subjecting them to burdensome compliance requirements. This bill would stifle digital asset innovation rather than improve national security or stop money laundering.
Instead of participating in Warren’s misguided efforts, Congress should focus on helping federal law enforcement crack down on actual illicit finance. The bipartisan Financial Technology Protection Act, introduced by Senators Ted Budd and Kirsten Gillibrand, is a step in the right direction. This bill creates a working group to study and report on how terrorists use new financial technologies and how Congress and regulatory agencies can combat them. By addressing actual risks, Congress can deter criminal activity while preserving the ethos of personal freedom that defines the digital asset industry.
It is crucial for lawmakers to understand that bitcoin is not ideal for illicit finance. Terrorist organizations like Hamas and criminal groups like Silk Road have learned this the hard way. It is time for policymakers to adjust their approach and make informed decisions that support innovation and security.
[Contributors: Jason Les, CEO of Riot Platforms, Inc., and Brian Morgenstern, Head of Public Policy at Riot]