Senator Cynthia Lummis (R-WY) said cryptocurrency is involved in a very small portion of illicit financial activity, and she believes that percentage would decrease further if the crypto industry had regulatory clarity in the U.S. Lummis's statement came after almost 20% of her Congressional colleagues signed onto a letter led by Sen. Elizabeth Warren (D-MA) citing now-debunked reports of Hamas raising tens of millions of dollars in crypto.
"Crypto accounts for < 1% of all illicit finance activity and would be even less if we created a regulatory structure to allow the crypto industry to operate in America instead of unregulated foreign markets. Crypto is not the problem, bad actors that exist in every industry are," said Lummis.
Blockchain analytics firm Elliptic debunked reports that Hamas raised more than $130 million between Aug. 2021 and Jun. 2023 through crypto, saying it was a result of misinterpreting data. The firm added that it has been working with Warren's office and media outlets to provide proper understanding about these wallets' complexities.
On Oct. 18, Chainalysis pointed out inaccurate methodologies estimating cryptocurrency's role in terror financing. According to them, though some terrorist groups use cryptocurrency, most depend on traditional finance methods such as shell corporations. The company also emphasized blockchain's unique transparency making crypto traceable which is unfavorable for terrorist groups since it allows government agencies to identify and seize terrorist funding.
In Jan., Cato Institute criticized "blunt claims" made by Senator Warren linking cryptocurrency with terrorism as they "do not withstand scrutiny." The institute also stated that associating crime with crypto contradicts the appropriate allocation of law enforcement resources because money laundered through crypto represents a minute fraction compared to total laundered money annually, according to Chainalysis and UN Office on Drugs and Crime estimates.
In Jul., Senators Cynthia Lummis and Kirsten Gillibrand (D-NY) reintroduced the bipartisan Responsible Financial Innovation Act. Lummis wrote that this bill will provide full regulations for crypto asset exchanges, making them register with the Commodity Futures Trading Commission (CFTC). This act also includes strong custody and lending limits to protect consumers, establish an interagency law enforcement working group to prevent crypto usage in criminal activity, emphasizing that "Crypto assets will be a part of the future of finance."
Lummis previously voiced concerns about the absence of comprehensive regulations for crypto industry potentially pushing it "offshore or into the shadows." She stated in Jun. that the SEC's current "regulation by enforcement" approach is harmful for consumers.
