April 17, 2024

Warren to Secretary Yellen: Any New Crypto Legislation Must Include All Anti-Money Laundering Protections Requested by Treasury Department

Warren: “Stablecoin legislation, which will grow the crypto market and opportunities for terrorist fundraising, must include the full suite of AML tools that Treasury requested in its November 2023 letter to Congress as necessary to effectively combat that threat.”

Text of Letter (PDF)

Washington, D.C. – United States Senator Elizabeth Warren (D-Mass.), a member of the Senate Banking, Housing, and Urban Affairs Committee, sent a letter to Secretary of the Treasury Janet Yellen, expressing the need for any new cryptocurrency legislation to include the full suite of anti-money laundering (AML) authorities that Treasury Department (Treasury) requested in a November 2023 letter to Congress. Senator Warren highlighted the growing threat crypto poses to our national security, particularly given Iran’s and Hamas’ reliance on crypto to fundraise and finance terrorist attacks. Senator Warren emphasized the importance of including all of Treasury’s requested AML powers in any legislation that Congress advances to create a new regulatory framework for the stablecoin market. 

“On April 9th, Deputy Secretary Adewale O. ‘Wally’ Adeyemo testified before the Senate Committee on Banking, Housing, and Urban Affairs on the threat cryptocurrency poses to our national security and the need for Congress to grant the U.S. Department of the Treasury additional anti-money laundering authorities to combat that threat. The Deputy Secretary’s testimony highlighted a letter Treasury sent to Congress in November 2023 listing those necessary tools in the wake of Hamas’s attack on Israel on October 7th. Those authorities must be adopted into any legislation Congress advances to create a new regulatory framework around the $157 billion stablecoin market,” wrote Senator Warren. 

Senator Warren noted that a key provision from Treasury’s November 2023 letter would apply anti-money laundering and combating the financing of terrorism (AML/CFT) requirements to the entire digital asset ecosystem, including payment intermediaries such as miners and validators. 

“Treasury’s efforts to counter terrorism and other illicit finance must evolve with the threat. As the Deputy Secretary noted in an exchange with Ranking Member Tim Scott, ‘while we can stop that money from financial institutions moving to Iran, I do not have the authority to stop cryptocurrencies from moving into Iran.’ Excluding miners, validators, and other intermediary nodes in the DeFi system from the stablecoin legislation’s AML/CFT requirements would allow bad actors to profit from the increase in crypto trading that stablecoin legislation would provide,” continued Senator Warren. 

“Any legislation that enhances the attractiveness of crypto to ordinary crypto traders will multiply money-making opportunities for sanctioned entities like Iran and the criminal underground… Stablecoin legislation, which will grow the crypto market and opportunities for terrorist fundraising, must include the full suite of AML tools that Treasury requested in its November 2023 letter to Congress as necessary to effectively combat that threat,” concluded Senator Warren. 

Senator Warren is an outspoken advocate for regulation and oversight of crypto to rein in unchecked illegal activity and protect consumers, the financial system, and national security:

  • In April 2024, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren asked Deputy Secretary Adeyemo about gaps in AML rules that allow sanctioned entities like Iran to earn revenue processing crypto transactions, highlighting that validators, middlemen between the payer and receiver in crypto transactions, are not subject to the same AML rules as the traditional banking industry. 
  • In April 2024, Senator Warren wrote to the House Financial Services Committee Chair Patrick McHenry (R-N.C.) and Ranking Member Maxine Waters (D-Calif.) urging them to include strong rules that protect consumers, financial stability, and our national security in any upcoming legislation related to stablecoins. 
  • In December 2023, Senator Warren sent letters to three crypto giants: the Blockchain Association, Coin Center, and Coinbase, asking each about their use of the revolving door to undermine efforts to rein in crypto’s use in terrorist financing.
  • In December 2023, Senator Warren announced an expanded coalition of Senate support for the bipartisan Digital Asset Anti-Money Laundering Act. Senators Raphael Warnock (D-Ga.), Laphonza Butler (D-Calif.), Chris Van Hollen (D-Md.), all members of the Senate Banking, Housing, and Urban Affairs Committee, and Senators John Hickenlooper (D-Colo.) and Ben Ray Luján (D-N.M.) joined the bill as cosponsors. 
  • In December 2023, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren questioned Big Bank CEOs, who agreed on the need to apply anti-money laundering rules to crypto companies to protect national security. 
  • In October 2023, Senators Warren and Marshall and Representative Sean Casten (D-Ill.) led 102 lawmakers in a bipartisan letter to National Security Advisor Jake Sullivan and Brian Nelson, Under Secretary for Terrorism and Financial Intelligence at the Department of the Treasury raising grave concerns about reports that in the months leading up to their brutal October 7th terrorist attack on Israel, Hamas and Palestinian Islamic Jihad raised millions of dollars via crypto, evading U.S. sanctions to fund their operations.
  • In October 2023, at a hearing of the Senate Armed Services Committee, Senator Warren spoke about the need to crack down threats posed by crypto, noting that half of North Korea’s missile program is paid for through crypto crime.
  • In September 2023, Senators Warren, Roger Marshall (R-Kan.), Joe Manchin (D-W.Va.), and Lindsey Graham (R-S.C.) announced an expanded coalition of Senate support for their bipartisan Digital Asset Anti-Money Laundering Act, announcing 11 new cosponsors of their legislation – Senators Peters, Dick Durbin (D-Ill.), Chair of the Senate Judiciary Committee, Smith, King, Shaheen, Bob Casey (D-Pa.), Blumenthal, Bennet, Cortez Masto, Fetterman, and Whitehouse.
  • In July 2023, Senator Warren, along with Senators Marshall, Manchin, and Graham reintroduced the Digital Asset Anti-Money Laundering Act, legislation that would mitigate the risks that digital assets pose to our national security by closing loopholes and bringing the digital asset ecosystem into greater compliance with the anti-money laundering and countering the financing of terrorism (AML/CFT) frameworks governing the greater financial system.
  • In July 2023, at a hearing, Senator Warren warned about the national security risks of rogue states using crypto to evade sanctions and fund their weapons programs, spying, and cyberattacks – calling out North Korea for stealing over $3 billion in crypto over the past 5 years, and using proceeds to fund its illegal nuclear weapons program,
  • In May 2023, a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren called out crypto’s role in fueling the fentanyl crisis and announced she will reintroduce her bipartisan Digital Asset Anti-Money Laundering Act, a bill that would close loopholes in anti-money laundering rules, cutting off drug suppliers and cartels from using crypto to facilitate their illegal business. 
  • In May 2023, at a hearing of the Senate Armed Services Committee, Senator Warren questioned senior intelligence officials about crypto’s threats to national security as the method of choice for countries to evade sanctions and fund weapons programs, support spying, and promote cyber attacks.
  • In February 2023, at a hearing of the Senate Committee on Banking, Housing, and Urban Affairs, Senator Warren raised concerns that key parts of the crypto industry are not subject to the same money laundering laws that cover other financial organizations, allowing financial criminals to use crypto to launder billions. 
  • On December 14, 2022, Senators Warren and Marshall introduced the Digital Asset Anti-Money Laundering Act of 2022, bipartisan legislation that would mitigate the risks that crypto and other digital assets pose to US national security by closing loopholes in the existing anti-money laundering and countering of the financing of terrorism framework and bring the digital asset ecosystem into greater compliance with the rules that govern the rest of the financial system.
  • In September 2022, Senator Warren sent a letter to Treasury Secretary Janet Yellen calling on the Treasury Department and the Financial Stability Oversight Council to build a strong regulatory framework for the crypto market.
  • In March 2022, Senators Warren, Reed, Warner, and Tester introduced the Digital Asset Sanctions Compliance Enhancement Act to ensure that Vladimir Putin and Russian elites don't use digital assets to undermine the international community’s economic sanctions against Russia following its invasion of Ukraine.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren highlighted the various crypto tools that could make it easier for sanctioned individuals to hide their wealth and lessen the impact of Russian sanctions.
  • In March 2022, at a hearing of the Senate Banking, Housing, and Urban Affairs Committee, Senator Warren warned that crypto may allow Russia to dodge sanctions and urged stronger regulation of the crypto market to ensure that countries, drug traffickers, cyber criminals, and tax cheats can’t evade economic pain.
  • In March 2022, Senators Warren, Warner, Reed, and Brown sent a letter to Treasury Secretary Janet Yellen, asking about the Treasury Department’s plans to enforce sanctions-compliance guidance for the crypto industry to ensure that economic sanctions remain an effective tool for achieving foreign policy goals.

###