Lawmakers from both major parties demand to know more about how terrorists are abusing crypto anonymity and lack of oversight for nefarious ends. And how to fight this pest most effectively.
The US House of Representatives on Thursday considered a bipartisan bill creating an independent Fintech Task Force to Combat Terrorism and Illicit Finance.
The Fintech Protection Act of 2023 is the latest version of a bill introduced in previous sessions. It is an attempt to deal with emerging financial technologies, such as cryptography, as they affect national security and financial stability.
Bipartisan war on terrorists
The new version of the bill, co-sponsored by Sens. Kirsten Gillibrand (D-NY) and Ted Budd (R-NC) and Representatives Zack Nunn (R-Iowa) and Jim Himes (DCT), aims to create a working group. Nunn told CoinDesk that he will study the actual and potential use of cryptocurrencies and other emerging technologies by terrorists and criminals.
The new group will consist of officials from various government agencies and departments. Including the Central Intelligence Agency, the FBI, the Department of Justice, the Secret Service, the Financial Crimes Enforcement Network, and the Department of State. In addition to five individuals appointed by the Undersecretary for Terrorism and Financial Intelligence Affairs to represent financial technology companies, financial institutions, and research organizations.
They will conduct independent research on digital assets, including cryptocurrency, and propose regulations. The working group will also submit annual reports to the Secretary of the Treasury.
As crypto crime increases, Congress is paying more attention to the interaction between finance, technology, and crime. In the past year, the volume of illegal transactions has reached a level high at all $20.6 billion. Terrorist financing also increased from the previous year. though not to the same extent in 2021.
Terrorism is linked to cryptocurrency
As recently as three years ago, nearly 5% of terrorist incidents were related to digital or crypto assets. That number is now more than 20%, according to a senior figure at the United Nations in a recent interview with Bloomberg.
Cryptocurrency mixing companies such as Tornado Cash have recently been in trouble for concealing financial ties to organized crime. These crypto mixers work by combining the cryptocurrency transactions of many users to disguise the source and destination. Sinbad.io, ChipMixer, and Blender are all mixers that have been criticized for North Korean money laundering. However, the strict measures imposed on their use may pose privacy risks.
Accounts for illegal activities related to cryptocurrency less than 1% of the total volume. Despite the increase this year, the trend is downward.
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