The meteoric rise in interest in cryptocurrencies has led to a ton of new investments flooding into the space. Speculators, professional investors, and even whole companies want in, and there’s no sign that will be abating anytime soon. The increased interest is also leading to greater scrutiny, including from the United States Congress.
For all of the hype that suggests cryptos are the wave of the future for financial transactions, there remains a bit of a stigma attached to the space due to suspicions that cryptos have been used to finance illegal activities. Last May, representatives Kathleen Rice (D-NY) and Derek Kilmer (D-WA) introduced HR2433, a bill that aims to push the Department of Homeland Security to coordinate with other federal partners to conduct a threat assessment on virtual currencies.
Specifically, the bill called on the DHS Office of Intelligence and Analysis to examine “the threat posed by individuals using virtual currency to carry out activities in furtherance of an act of terrorism, including the provision of material support or resources to a foreign terrorist organization.” Upon completion, the DHS would be expected to share its findings with other law enforcement bodies at the federal, state, and local levels.
It has been suspected that terror network ISIS has been using Bitcoin to fund its activities. Last year, a 27-year-old Pakistani-Born US resident named Zombie Shahnaz was stopped by authorities as she attempted to board a flight bound for Pakistan. She was subsequently charged with bank fraud, money laundering, and conspiracy to commit money laundering, as it’s alleged that she fraudulently obtained funds that were used to purchase Bitcoin and other cryptocurrencies online. Shahnaz was discovered to have made a number of strange wire transfers to vague entities and individuals located overseas.
“These transactions were motivated to benefit ISIS, which the defendant ultimately sought to join in Syria,” according to court documents.
Last week, the US Senate held hearings on amending the Department of Homeland Security Authorization Act via HB2825. One section of that bill contains language that’s similar to HR2433, which successfully passed the House last year before being sent over to the Senate. No action was taken by the Senate since that point, so it appears that the threat assessment request has been absorbed into the broader DHS bill. Either way, it’s clear that cryptos are on the radar of regulators, but we’ll have to wait and see if the assessment sparks any changes.