In response to the recent attacks from Hamas on Israeli civilians, the U.S. government has proposed new trade restrictions and reporting requirements aimed at curbing the terrorist group’s sources of crypto funding.
On October 17, over 100 senators wrote a letter to U.S. Treasury and White House officials, citing the Wall Street Journal which reported that Hamas and Palestinian Islamic Jihad had raised over $130 million in crypto. Although some industry analysts believe this figure is exaggerated, the letter urged administration officials to provide their own estimations on the amount of crypto held by both organisations, as well as the actors involved in facilitating token transfers.
The letter was backed by senators including Elizabeth Warren, a long-time crypto critic who has warned about crypto’s potential use for violating sanctions.
Two days later, the Treasury Department proposed new requirements for financial institutions interacting with cryptocurrency mixers – entities that obscure the trail of funds on the blockchain. Wally Adeyemo, deputy secretary of the Treasury, told the Financial Times that the Treasury is taking strong action to address crypto illicit finance risks and root out the illicit use and abuse of the crypto-mixing ecosystem.
The Financial Crimes Enforcement Network (FinCEN) wants institutions to report transactions they suspect are connected to crypto mixers outside of US jurisdiction. Last year, the Treasury’s Office of Foreign Assets Control (OFAC) sanctioned crypto mixers such as Blender.io and Tornado Cash, which were allegedly helping North Korean hackers launder over $7 billion in digital assets. In addition, the Treasury sanctioned a Gaza-based Bitcoin exchange and its operator last week for having platformed individuals linked to ISIS.
