US lawmakers urge White House to stamp out digital asset terrorist financing

A bipartisan group of U.S. lawmakers urged the Biden administration to “swiftly and categorically” crackdown on using digital assets by terrorist organizations such as Hamas and its affiliates following the militant group’s deadly October attacks in Israel.

Led by Senators Elizabeth Warren (D-Mass.) and Roger Marshall (R-Kan.) and Representative Sean Casten (D-Ill.), 105 lawmakers signed the letter to National Security Advisor Jake Sullivan and Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the Department of the Treasury.

The letter described Hamas as “one of the most sophisticated crypto users in the terror-finance domain” and noted “the national security threat crypto poses to the U.S., and our allies.”

It also raised concerns about a Wall Street Journal report that claimed to have found, in the months leading up to the attacks, that Hamas and affiliate Palestinian Islamic Jihad (PIJ) raised millions of dollars via digital assets, evading U.S. sanctions to fund their operations.

“Researchers who study Hamas’s financing said crypto remains one of a number of tools the group uses to raise funds,” the report read.

On October 7, Hamas militants began their coordinated attack on various Israeli targets, resulting in over 1,200 deaths and 2,900 wounded as of October 11. Israeli police on October 10 said it had frozen several digital asset accounts that were used to solicit donations for Hamas.

“Between August 2021 and this past June, [Hamas and PIJ] raised over $130 million in crypto, and moved millions among each other, ‘with PIJ sending over $12 million in crypto to Hezbollah since 2023,” said the lawmaker’s letter.

While “[i]t couldn’t be determined whether the crypto they received was directly used to finance the assault,” Hamas has been clear in its solicitations for crypto about the intended use of the assets.

The letter urged the Biden administration to clarify its plans to prevent digital asset-financed terrorism.

“Given the clear and present danger posed by the financing of these and other militant organizations, we ask the Administration to provide additional details on its plan to prevent the use of crypto for the financing of terrorism,” wrote the lawmakers. “Congress and this Administration must take strong action to thoroughly address crypto illicit finance risks before it can be used to finance another tragedy.”

Despite the lawmakers’ concerns, the Biden administration hasn’t been idle regarding terrorist financing measures.

The U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) on October 18 issued sanctions against 10 key Hamas terrorist group members, operatives, and financial facilitators in Gaza and elsewhere, including Sudan, Türkiye, Algeria, and Qatar. Amongst them were a “Gaza-based virtual currency exchange and its operator.”

Watch: US Congressman Patrick McHenry on Blockchain Policy Matters