U.S. Senator Bill Hagerty (R-TN) has voiced his belief that traditional banks may perceive the burgeoning cryptocurrency industry as a threat. However, he stressed that this should not deter bipartisan efforts to establish regulations for the crypto sector that encourage innovation. These comments were made in response to statements by JPMorgan Chase CEO Jamie Dimon during a Senate Banking Committee hearing on December 6.
According to Hagerty, "I can understand why large banks are opposed to cryptocurrencies – the technology has the potential to disrupt much of the traditional banking model. This is not a fight for DC to pick sides on. We need to regulate with a light touch that doesn’t kill innovation in the US."
During the oversight hearing, Senator Elizabeth Warren (D-MA) questioned Dimon about cryptocurrency. In response, Dimon stated, "I've always been deeply opposed to crypto, Bitcoin, etc." He argued that crypto is "somewhat anonymous" and could be used to circumvent anti-money laundering protocols and sanctions. "If I were the government, I'd close it down," said Dimon.
A recent analysis by The Daily Hodl revealed that JPMorgan Chase has been fined nearly $39 billion since 2000 by U.S. regulators and enforcement agencies for violations including anti-competitive practices and securities abuses. The U.S. Securities and Exchange Commission (SEC) recently imposed a $4 million fine on JPMorgan Chase for deleting 47 million emails which were required for regulatory access.
Senator Cynthia Lummis commented on social media platform X that cryptocurrency is implicated in only a small fraction of illicit financial activity. She believes this percentage would decrease further if there was regulatory clarity in the U.S. for the crypto industry. Lummis stated: "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."
Jane Khodarkovsky, a partner at Arktouros and former Human Trafficking Finance Specialist with the U.S. Department of Justice’s Money Laundering and Asset Recovery Section, testified during a Congressional hearing on November 15. She stated that blockchain's traceability allows prosecutors and other professionals to track individuals attempting to use cryptocurrency for illicit activities. According to her testimony, Khodarkovsky pointed out that "robust enforcement mechanisms" already exist in U.S. law to combat illicit financial activity. However, she highlighted that law enforcement and other authorities may lack the necessary resources or funding to enforce them effectively.
In her testimony, Khodarkovsky quoted Treasury Secretary Janet Yellen's 2022 statement: "It is difficult to use crypto to evade sanctions." Yellen added that "even large-scale transactions" would be detected by experts examining the blockchain. She also noted that crypto exchanges are subject to existing anti-money laundering and counter-terror financing regulations.
