Some U.S. Senators are ramping up the anti-crypto rhetoric again, urging federal agencies to take action against the illicit use of digital assets.
Democrat Senator Maggie Hassan is the latest to raise concerns about the use of cryptocurrency as a means of payment for ransomware attacks.
The Senate Homeland Security and Governmental Affairs Committee member sent a letter on Sept. 16 to several agencies including the Justice Department, the Department of Homeland Security, the Internal Revenue Service, the Securities and Exchange Commission, and the Treasury Department’s Financial Crimes Enforcement Network.
In it, she aired her concerns citing a recent case in her home state of New Hampshire where $2.3 million was stolen in a cyber attack on the town of Peterborough before being converted into cryptocurrency.
“The anonymity provided by cryptocurrency has helped facilitate its use by criminals in a myriad of ways. These uses include drug sales over the dark web, payments for ransomware attacks, tax evasion, financing for terrorism and organized crime, money laundering, and more.”
She outlined the difference between centralized exchanges with KYC (know-your-customer) requirements and decentralized exchanges and OTC (over-the-counter) desks without such requirements, adding that more KYC enforcement was needed.
Senator Hassan asked a number of questions about what action agencies were taking to curb the illicit use of cryptocurrencies for ransomware.
Hassan is a member of the Senate Finance Committee alongside Senator Elizabeth Warren who labeled crypto the "new shadow bank" earlier this month. The committee has jurisdiction over matters relating to taxation and revenues, trade agreements and tariffs.
Lawmakers on both sides of the aisle have been presenting their arguments for and against cryptocurrencies as regulatory pressure mounts in the U.S.
In an interview with Reason Magazine earlier this month, Senator Cynthia Lummis said that her vision was to create a regulatory and statutory framework, adding:
“We want to make sure that Bitcoin, stablecoins, tokens can innovate and that the U.S. dollar can innovate as well and become a digital currency. So there's going to be formats that people can use that are much more user-friendly than our more old-fashioned forms of currency.”
In early August Senators Ron Wyden, Cynthia Lummis, and Pat Toomey proposed an amendment to the controversial infrastructure bill seeking clearer terminology around the crypto tax provisions to ensure it would not stifle innovation.
However, the bill passed the Senate on Aug. 10 with the language broadly classifying most actors as crypto brokers remaining unchanged. This means that software firms, network validators, stakers, and miners may be subject to third-party tax reporting requirements if the bipartisan infrastructure bill passes a final vote on September 27 as scheduled by House Speaker Nancy Pelosi.