US Senator Elizabeth Warren cited a report from the Government Accountability Office (GAO) that states that countries or entities are using cryptocurrencies to evade sanctions. She argues that cryptocurrencies should be subject to the same anti-money laundering regulations as other financial sectors. However, the cryptocurrency community has a different view.
Elizabeth Warren, a representative of the Democratic Party who opposes blockchain and cryptocurrencies, referred to a report published by the GAO in December. She claimed that countries currently under sanctions are using cryptocurrencies to evade them and undermine national security. She tweeted, “It’s time for cryptocurrencies to follow the same anti-money laundering rules as everyone else, and I have a bill to do it.”
The GAO report titled “The Effectiveness of Economic Sanctions Threatened by Digital Assets” states that an increasing number of countries, including Iran and North Korea, are using Bitcoin or other digital assets to evade US sanctions and obtain illicit funds from other criminal activities. The report also highlights that the US Department of Justice and the Treasury Department are taking action to address the risks posed by the development of digital assets, including charging individuals or companies involved in facilitating the use of cryptocurrencies to evade sanctions. In November last year, the Treasury Department reached a nearly $4.4 billion settlement with the exchange Binance and its affiliates for violating US anti-money laundering laws.
Interestingly, users on Twitter added a community note under Warren’s tweet, citing the National Money Laundering Risk Assessment report published by the US Treasury Department in February 2022. The community note sarcastically points out that “fiat currency is the preferred currency for financial crimes,” contradicting Warren’s statement.
Coin Center, a cryptocurrency advocacy organization, also commented on Warren’s statement, stating that it contains errors or misleading content. Coin Center’s research director, Peter Van Valkenburgh, referred to the guidance issued by the Financial Crimes Enforcement Network (FinCEN) of the US Treasury Department in 2013, which states that cryptocurrencies have already been compliant with anti-money laundering regulations. He mentioned that cryptocurrency activities have been subject to the same anti-money laundering rules as traditional financial activities for the past 11 years, including user identification (KYC) and reporting financial transactions under the Bank Secrecy Act. However, he also acknowledged that individuals using personal wallets for transactions are not bound by the Bank Secrecy Act, but the same may apply to those using cash and other financial instruments.
Valkenburgh also pointed out that Warren’s tweet does not provide additional background information on the scale of money laundering through cryptocurrencies but only implies her personal stance that cryptocurrencies are more suitable for evading sanctions than traditional financial tools. He emphasized that the Treasury Department’s report does not support this claim and that fiat currency is the preferred tool for money laundering.
In conclusion, Warren’s call for cryptocurrencies to comply with anti-money laundering regulations has received pushback from the cryptocurrency community, which argues that cryptocurrencies are already subject to such regulations and that fiat currency is more commonly used for financial crimes.