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US Treasury Clarifies Minimal Role of Cryptocurrencies in Financing Hamas Activities

A senior official from the United States Treasury has provided clarification regarding the role of cryptocurrencies in funding militant groups like Hamas and Palestinian Islamic Jihad (PIJ), refuting earlier reports of significant financing through digital assets.

Brian Nelson, the Treasury’s Undersecretary for Terrorism and Financial Intelligence, addressed misconceptions during a testimony before the House Financial Services Committee on Feb. 14. His remarks aimed to counteract the findings of an October report by The Wall Street Journal, which suggested that Hamas and PIJ had received tens of millions of dollars in cryptocurrency funding between August 2021 and June 2023.

Nelson explained that the reported figures of $93 million and $41 million for PIJ and Hamas, respectively, were misleading and not indicative of direct funding to these groups. Instead, the amounts were misinterpreted, stemming from a misunderstanding of wallet balances rather than actual transfers to the organizations.

The clarification follows a correction by blockchain analytics firm Elliptic, whose data was cited in the original report. Elliptic adjusted the PIJ figure to $12 million, emphasizing the lack of evidence to support the initially claimed levels of crypto fundraising.

This development comes amid legislative debates over crypto regulations, with over 100 U.S. lawmakers expressing concerns about digital assets’ potential role in national security threats. However, Nelson’s testimony suggested that terrorist organizations primarily rely on traditional financial services rather than cryptocurrencies for their operations.

Representative Tom Emmer sought further details on the actual crypto amounts received by these groups, to which Nelson indicated that the figures were likely minimal. Despite this, Nelson emphasized the Treasury’s commitment to preventing the exploitation of digital assets for illicit purposes and called for additional tools to disrupt financial networks supporting terrorism.

In summary, the Treasury’s clarification offers a nuanced perspective on the role of cryptocurrencies in terrorist financing, highlighting the need for balanced regulation that addresses the complexities of digital assets without overstating their impact on national security.

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