The US Treasury Department is ramping up its efforts to regulate cryptocurrency transactions associated with terrorist organizations, notably Hamas. This initiative is part of a broader strategy to address national security risks related to virtual assets.
According to a recent Bloomberg report, Treasury officials disclosed that they are investigating approximately $165 million in cryptocurrency transactions suspected of supporting Hamas, a group designated as a terrorist organization by the US government.
Risks of Cryptocurrency Allegedly Used by Hamas
In a detailed two-page letter, Deputy Treasury Secretary Wally Adeyemo urged Congress to approve new authorities that would strengthen oversight of digital currencies. The letter, released pursuant to a Freedom of Information Act (FOIA) request, sheds light on the Treasury’s ongoing concerns regarding the potential misuse of cryptocurrencies for illicit financing.
Adeyemo highlighted that while Hamas and similar groups still rely predominantly on traditional financial systems, there is an increasing concern that these organizations might increasingly turn to cryptocurrencies as access to conventional financial products becomes more restricted.
Among the proposals, Adeyemo suggested granting the Treasury’s Office of Foreign Assets Control (OFAC) the authority to impose secondary sanctions on virtual asset firms that engage with sanctioned entities. This measure aims to bolster the government’s ability to combat money laundering and terrorism financing through digital currencies.
Adeyemo emphasized the necessity for enhanced regulatory powers to tackle the evolving threats posed by virtual assets. He stated:
“The Treasury needs to modernize its arsenal to take on crypto exchanges that offer services in the US while also operating in jurisdictions with weak or non-existent rules regarding sanctions, money laundering, and terrorism funding.”
Adeyemo Urges Congress to Enhance Regulatory Powers
However, Riot’s Director of Public Policy Sam Lyman has previously argued that mainstream reports often overlook critical details, portraying cryptocurrencies not only as tools for terrorism but also as potential obstacles for such organizations.
Lyman asserted that Hamas has even advised its supporters against using Bitcoin or any other cryptocurrency for donations, citing the transparent nature of blockchain technology. “Why?” Lyman explained, “Because the transparent nature of the blockchain had Western intelligence following their every transaction like bloodhounds.”
This transparency, Lyman argues, makes it challenging for groups like Hamas to effectively use Bitcoin without drawing unwanted attention. He characterized money laundering through Bitcoin as “a classically dumb crime,” emphasizing that the visibility of transactions can spotlight those involved.
The donations chart indicates that Hamas has experienced a decline in digital asset donations since late 2022 and early 2023, with Bitcoin being the primary cryptocurrency used.
This decline suggests that law enforcement agencies have been effective in tracking these funds, further complicating the operational capabilities of terrorist organizations.
Ultimately, it remains to be seen whether the increased regulatory powers requested by Adeyemo will pass Congress. The digital asset ecosystem has played a notable role in the upcoming US presidential election, which could mark a significant shift under a potential Trump return to the White House.
