Sen. Elizabeth Warren, who has a fearsome reputation as a financial watchdog and the brain behind the Consumer Financial Protection Bureau, isn’t known for agreeing with big bank CEOs. But on Wednesday, when the Senate banking committee held its annual oversight hearing with the heads of America’s biggest banks, the Massachusetts Democrat found herself on the same page as all eight of them.
“I am not usually holding hands with the CEOs of multibillion-dollar banks. But this is a matter of national security,” Warren said.
The matter at hand was how to regulate cryptocurrency. Warren, a vocal crypto skeptic, took the opportunity to ask the CEOs of Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, and other major banks whether crypto should be similarly regulated.
“Do you think that crypto companies facilitating financial transactions should have to follow the same anti-money laundering rules that your bank has to follow?” Warren asked.
“Absolutely,” replied Wells Fargo CEO Charles Scharf. “Absolutely,” said Bank of America’s Brian Moynihan. The other six CEOs echoed the statement, prompting Warren to quip, “Alright, it's the word of the day.”
JPMorgan’s Jamie Dimon went even further. “If I were the government,” he added, “I would close it down,” suggesting that crypto has no application except for criminal activity.
Warren has twice introduced a bill to include know-your-customer rules to the crypto ecosystem, in part by requiring wallet providers and node operators to delve into their users’ identities. The crypto industry has decried the bill as an attack on privacy, but supporters of regulation, which include the U.S. Treasury, note that digital currencies have been widely adopted by criminals as well as nations unfriendly to the U.S.
On Wednesday, Warren offered a brief history of bank regulation as an argument for cracking down on crypto.
“Back in 1970, Congress passed the Bank Secrecy Act to make sure that banks don't run a financial system that is open to terrorists and drug traffickers and rogue nations,” she said.
While that last was updated after the September 11 terrorist attacks, Warren added, it has not changed since, and in her view is in desperate need of a revamp as digital currencies’ popularity explodes.
“Today's terrorists have a new way to get around the Bank Secrecy Act—cryptocurrency,” she said. “Last year, an estimated $20 billion in illicit crypto transactions funded every kind of dangerous criminal. North Korea has funded at least half its missile program, including nuclear weapons, using the proceeds of crypto crime. And Israeli officials have confirmed that Hamas received millions of dollars through crypto transactions,” she said.
The crypto industry has disputed that last claim, saying that stories of Hamas crowdfunding via digital currencies have been overstated.
Last month, the Department of Justice announced a $4.3 billion settlement with Binance, the world’s largest crypto exchange, over criminal charges of money laundering.
The Treasury is also looking to crack down on crypto shenanigans. Deputy Secretary Wally Adeyemo last month delivered a message to the Blockchain Association, essentially telling the crypto industry to eliminate bad actors or have regulators do it for them.
Addressing “those within the digital asset industry who believe they are above the law, those that willfully turn a blind eye to the law, and those that promote assets and services that aid criminals, terrorists, and rogue states,” Adeyemo said, “we will find you and hold you accountable.”
