letter – terrorist financing
Senator Shelly Moore Capito (R, WV) sent a letter to the U.S. Treasury’s Under Secretary for Terrorism and Financial Intelligence Brian Nelson last Thursday expressing her concerns and asking a series of questions around terrorist financing via crypto assets and products such as mixers. Read her press release.
Her first question to Nelson is: “Has Treasury begun an independent and comprehensive investigation into the extent FTOs (foreign terrorist organizations) are reportedly avoiding sanctions through the use of digital assets, particularly actors funding Hamas and affiliated organizations?”
The tone of Capito’s letter is reminiscent of the October 26 letter from Senator Cynthia Lummis (R, WY) and Rep. French Hill (R, AR) which also addressed concerns on terrorist financing including the use of crypto exchange Binance and the Tether USD stablecoin. At the time, Lummis was also trying to push through her NDAA amendment – a compromise of sorts – which would have required “federal regulators to enact strong examination standards that will help prevent the utilization of cryptocurrencies in illegal activities” according to an October 23 press release.
Capito’s in-state colleague/rival – Senator Joe Manchin (D, WV) – is a co-sponsor of Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act (S.2669).
what you should know: The public message is clear on both sides of the aisle in Congress: terrorist financing and money laundering concerns need to be rooted out in crypto. Neither party wants to look like they approved of terrorist financing and money laundering via digital assets. But, the pro-crypto forces don’t want draconian regulation to harm U.S. opportunity in digital assets. Whereas, the “anti-crypto army” wants digital assets to be severely restricted if not altogether prevented from accessing the U.S. financial system.
letter – Senator Warren
Last night, Blockchain Association CEO Kristin Smith revealed that her organization had received a letter yesterday from Senator Elizabeth Warren demanding answers on former U.S. military, government and law enforcement officials involvement in the blockchain industry association itself. See the letter.
Sen. Warren’s letter was a response to a November 15 letter (see that one) organized by the Blockchain Association and sent to leaders of the House Financial Services and Senate Banking Committees. The signers of the Nov. 15 letter – former members of the U.S. military and law enforcement – were clearly trying to change the narrative gaining traction in Congress after the terrorist attacks in Israel and the Wall Street Journal’s October 10 story on crypto’s ties to terrorist financing (which was walked back by the publication on October 27).
what you should know: The center of the storm, of course, is Senator Warren’s Digital Asset Anti-Money Laundering Act which industry fears would be a serious step back for digital asset companies in the United States. The Senator, on the other hand, sees the scourge of special interest and the need to close loopholes around AML and terrorist financing laws.
letter – Tether
Last Friday, Tether, which currently issues the largest U.S. Dollar stablecoin in the world, responded to the October 26 letter (the same one as mentioned above) sent by Congress Sen. Lummis and Rep. Hill. The company provided new information on how it’s working with U.S. government authorities including the Office of Foreign Asset Control to combat terrorist financing and institute effective anti-money laundering policies.
One example of new procedures according to Tether: “Tether’s launch of a wallet-freezing policy on December 1, 2023, is a landmark initiative for enhanced security and compliance within the cryptocurrency ecosystem.” See Friday’s letter signed by Tether CEO Paolo Ardoino.
Tether Releases Letters Shared With The U.S. Senate Committee On Banking, Housing, And Urban Affairs And The U.S. House Financial Services Committee – Tether blog
what you should know: Tether is feeling the heat. The United States is coming for its Dollar.
lobbying war chest
Coinbase announced yesterday that $78 million had been raised in Q4 in support of a new political action committee called the Fairshake PAC. “The hope is to support bipartisan, crypto-forward candidates in 2024,” said a Coinbase blog post.
See the PAC’s website which allows for additional donations.
Coinbase, Coinbase CEO Brian Armstrong, Circle, Messari, Paradigm, Ripple, Fred Wilson, Cameron Winklevoss and Tyler Winklevoss are among the many donors. “The groups’ full donor profile won’t be public until campaign finance disclosures are released early next year,” reports Politico’s Jasper Goodman. Read that one.
Crypto and Blockchain Leaders Amass $78 Million for Fairshake Super PAC and its Affiliates to Support Pro-Innovation and Pro-Crypto Leadership Going Into 2024 Congressional Elections – press release
what you should know: The Fairshake PAC is the second political funding vehicle (at least) partially inspired by Coinbase and creates another front for the “pro-crypto army.” Coinbase’s grassroots lobbying initiative known as “Stand With Crypto” continues on with 215,000 members to date and a goal of 1 million members.
Perhaps taking a page from SEC Commissioner Hester Peirce’s (R) crypto playbook, the United Kingdom’s Financial Conduct Authority (the UK’s SEC) and the Bank of England will introduce a new regulation on January 8 which will allow for the transaction of digital tokenized securities within the regulators’ “digital securities sandbox.” In short, companies will be able try certain new crypto products under the regulator’s supervision without the risk of breaking a law. See it.
Back in April of 2021, Commissioner Hester Peirce introduced “Token Safe Harbor Proposal 2.0” which would have provided the themes of a similar structure in the United States. Given that the Democratic majority of Commissioners in the SEC have generally voted against anything innovation focused in digital assets, the proposal has yet to go anywhere.
CoinDesk’s Camomile Shumba covers the new UK regulation: “Businesses will also get to test distributed ledger technology that powers crypto to digitize or tokenize traditional securities.” Read her summary.
what you should know: What if the United States had a sandbox for industry to play in? In the future, the UK’s efforts could be another example of how/why the United States falls behind when it comes to digital assets innovation.
see more tips
Newly filed Bitcoin ETF application targets ESG investors with carbon credits – Fortune (on Yahoo)
Should Artists Disclose Their Use of AI? One Artist’s Work Sparked a Web3 Debate – NFT Now
2024 Crypto Market Outlook – Coinbase
Circle adds Solana to list of chains used by EURC stablecoin – The Block
Crypto hiring: Blockchain.com to expand workforce by 25%, hires new SVP – Blockworks