Home Crypto News News Lummis vs. Warren: Senators Battle for Crypto’s Narrative in Hamas Funding

Lummis vs. Warren: Senators Battle for Crypto’s Narrative in Hamas Funding

James Morales
Published October 27, 2023 3:21 PM
Giuseppe Ciccomascolo
Verified by Giuseppe Ciccomascolo
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Key Takeaways

  • Senators Warren and Lummis have called for action to crack down on the use of crypto by Hamas.
  • Despite their shared objective, the two lawmakers have very different approaches to crypto regulation.
  • Lummis’ legislative efforts have the support of many US crypto firms.
  • Warren is often perceived as a pariah by the industry.

The illicit use of cryptocurrency by criminal networks has risen up the political agenda in recent weeks. After global media outlets highlighted Hamas’ use of crypto following the militant group’s October 7 attacks on Israel, lawmakers from across the political spectrum have turned their attention to the issue. 

From the Democratic party, Elizabeth Warren has confirmed her role as the Senate’s leading crypto skeptic, calling for swift intervention and reform. Meanwhile, on the Republican side of the aisle, Cynthia Lummis has pushed the Justice Department to act against non-compliant crypto firms.

Hamas Crypto Fundraising Triggers Bipartisan Outrage

While the use of cryptocurrency by criminal groups and terrorist organizations has long been documented, since October 7, US politicians have been addressing the issue with renewed urgency.

Alongside her Republican colleague Roger Marshall, on October 17, Senator Warren published an article in the Wall Street Journal (WSJ), arguing the case for stricter anti-money laundering and counter-terror financing (AML/CFT) rules for crypto transactions.

Citing spurious figures that inflated the value of Hamas’ cryptocurrency proceeds, the article called for a sweeping overhaul of American AML/CFT regulation. 

“Every bank in America is required to engage in basic compliance activities to ensure it isn’t aiding criminals […] There is no reason billion-dollar Bitcoin mining companies, wallet providers, and others in so-called decentralized finance shouldn’t do the same,” the Senators wrote.

In addition to their article for the WSJ, Warren and Marshall wrote to the White House expressing their “grave concern” over the national security implications of Hamas and affiliated groups’ use of cryptocurrency. 

The letter was signed by over 100 Congressional lawmakers from both parties. Many of the signatories have previously expressed their support for Warren and Marshal’s Digital Asset Anti-Money Laundering Act.

Senator Lumis Urges Justice Department to Investigate Firms’ Hamas Links

Like Senator Warren, Cynthia Lummis is known for bipartisan efforts to create a regulatory framework for crypto assets, having co-sponsored the Responsible Financial Innovation Act with Kirsten Gillibrand.

However, whereas the Warren-Marshall Act is focused on AML/CFT, Lumis and Gillibrand’s Bill turns its attention more toward consumer protection.

Nevertheless, on Thursday, Senator Lummis and House Representative French Hill wrote to the Justice Department, calling for it to expedite investigations into Tether and Binance, taking into account revelations that the two offshore crypto firms had facilitated transfers to Hamas-controlled crypto wallets.

On October 16, Tether revealed that it had frozen wallets, containing over $873,000 worth of stablecoins linked to illicit activity in Israel and Ukraine. 

But while the asset freeze represents a victory in the battle against illicit crypto financing, Lummis observed that Tether only acted following a request from Israeli law enforcement.

Likewise, Binance only moved to shut over 100 accounts that were associated with Hamas after it was asked to by Israeli intelligence authorities.

“Based on this alarming information and the horrifying, unjustified attack on Israel,” Lummis and Hill urged the Justice Department “to reach a charging decision on Binance that reflects their level of culpability and expeditiously conclude [its] investigations into the ongoing illicit activities involving Tether.”

Crypto Queen and Anti-Crypto Army Commander 

While their recent interventions suggest a shared goal — cracking down on the use of cryptocurrency to fund groups like Hamas — Warren and Lummis can hardly be considered bedmates in their respective campaigns to regulate the US crypto sector.

Since Politico first reported  that Warren was building an “anti-crypto army” back in February, the Senator from Massachusetts has openly embraced the label, cultivating her image as one of the crypto sector’s harshest critics.

On the other hand, Politico’s equally catchy epithet for Senator Lummis dubbed  her Washington’s “crypto queen,” a crown she has sought to leverage in building support for her Bill in the Senate. 

The legislation Warren and Marshall have proposed has been widely condemned by US crypto firms, who argue that it would drastically increase the cost of regulatory compliance and stifle American innovation.

Meanwhile, the Lumis-Gillibrand Act has garnered a much more enthusiastic reception. For example, the Blockchain Association, whose members include Coinbase, Circle, Ripple, and others, lauded  the legislation as a “milestone moment for crypto policy.”

Industry stakeholders have especially welcomed provisions in the bill that would settle the long-running debate over whether cryptocurrencies are securities, and clarify the tax status of different crypto investments.

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