US Senator Elizabeth Warren has reached out to Scott Bessent, Donald Trump’s nominee for Treasury Secretary, advocating for stricter oversight of the cryptocurrency sector. Her open letter, dated January 12, emphasizes the need for the Treasury Department to enhance its authority to regulate digital assets, particularly regarding anti-money laundering (AML) and counter-terrorist financing (CFT) efforts.
In her correspondence, Warren raised concerns about the potential misuse of cryptocurrencies for illicit activities, including money laundering and sanctions evasion. She noted that these digital assets have been employed by bad actors to fund significant threats to national security, such as North Korea’s nuclear ambitions and ransomware operations tied to Russia’s military actions in Ukraine.
Warren questioned whether the Treasury’s AML and CFT initiatives should incorporate provisions aimed at mitigating risks associated with digital assets. She suggested that the department might benefit from a secondary sanctions mechanism, aimed at severing financial ties with entities involved in fintech and cryptocurrency. Furthermore, she inquired about extending the Office of Foreign Assets Control’s jurisdiction to include stablecoins and whether Congress should broaden the Treasury’s Bank Secrecy Act (BSA) authority to cover foreign companies operating within US markets.
The BSA mandates that financial institutions maintain operational records and report transactions to the Treasury. Currently, US-based cryptocurrency exchanges and service providers are subject to BSA requirements when involved in digital asset activities. Warren requested that Bessent be ready to address these pressing questions during his confirmation hearing scheduled for January 16.
Warren’s call for enhanced regulation aligns with her longstanding stance on the need for stricter controls over the cryptocurrency industry. In recent years, she introduced legislation aimed at ensuring that the crypto sector adheres to existing anti-money laundering frameworks. However, critics have voiced concerns that such regulations could stifle innovation and push the industry offshore. With Trump’s impending inauguration and a wave of pro-crypto candidates in Congress, the future regulatory landscape remains uncertain and contentious.