In response to the October 7 attack by Hamas on Israel, US Senators Mitt Romney, Mark Warner, Mike Rounds, and Jack Reed have taken a significant step to prevent the use of cryptocurrencies in terror financing. This bipartisan effort is reflected in the proposed Terrorism Financing Prevention Act, which seeks to extend US sanctions to entities involved in funding terrorist organizations with digital assets or fiat currency.
The Act, which comprises 10 pages, is designed to grant the US Treasury Department with the necessary tools to effectively combat terrorism in the digital age. It would enable the Office of Foreign Assets Control to prohibit transactions with foreign digital asset transaction facilitators identified as sanctioned entities. This includes the October 18 sanctioning of a Gaza-based cryptocurrency operator, as well as North Korean nationals for using cryptocurrency mixers in laundering funds.
The proposed legislation has been welcomed by various US lawmakers, including Senator Elizabeth Warren, who called for decisive action to curtail illicit crypto activities linked to terrorist funding. However, analysis by blockchain analytics firm Elliptic found no substantial evidence to suggest a significant volume of crypto donations to Hamas for its attacks. This highlights the complexity of the issue, which requires considering the potential risks of cryptocurrencies alongside their legitimate uses.
