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Senator Elizabeth Warren, a vocal critic of cryptocurrencies, claimed that some countries are using cryptocurrencies to evade sanctions, but was quickly refuted by the crypto community.

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Senator Elizabeth Warren, a vocal critic of cryptocurrencies, claimed that some countries are using cryptocurrencies to evade sanctions, but was quickly refuted by the crypto community.

U.S. Senator Elizabeth Warren referenced a report from the U.S. Government Accountability Office (GAO) stating that some countries or entities are using cryptocurrency to evade sanctions, and she called for cryptocurrencies to be subject to the same anti-money laundering regulations as other financial sectors. However, the sentiment in the crypto community seems to be diametrically opposed to her stance.

Elizabeth Warren: It's Time for Cryptocurrencies to Follow Anti-Money Laundering Regulations

As a prominent figure in the United States opposing blockchain and cryptocurrencies, Democratic Senator Elizabeth Warren quoted a report released by the U.S. Government Accountability Office (GAO) in December in a tweet on the 21st. The report claimed that sanctioned countries are currently using cryptocurrencies to evade sanctions and undermine national security:

It's time for cryptocurrencies to abide by the same anti-money laundering rules as everyone else, and I have a bill to make it happen.

Unsurprisingly, Warren took the opportunity to once again push forward her previously introduced "Digital Asset Anti-Money Laundering Act."

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Report States Regulatory Agencies Are Taking Action

According to the report titled "Effectiveness of Economic Sanctions Threatened by the Growth of Digital Assets" by GAO, it is claimed that an increasing number of countries, including Iran and North Korea, which are subject to U.S. sanctions, are using Bitcoin or other digital assets to evade the impact of sanctions and obtain illegal funds from other criminal activities.

Furthermore, GAO emphasized that the U.S. Department of Justice and the Treasury Department are taking action to address the risks posed by the development of digital assets, including charging individuals or entities involved in assisting the use of cryptocurrencies to evade sanctions:

In November of last year, the Treasury Department reached a nearly $4.4 billion settlement with the exchange Binance and its affiliates for violations of U.S. anti-money laundering laws.

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Community Note Challenges Treasury Report: Fiat Currency Is the Preferred Tool for Money Laundering

Interestingly, users on platform X added a community note with background information below the tweet, citing the U.S. Treasury Department's February 2022 "National Money Laundering Risk Assessment" report, stating that "fiat currency is the preferred currency for financial crimes," in a satirical response to Warren's statements.

Community Note: Fiat Currency Is the Preferred Currency for Financial Crimes

Coin Center: Misleading and False Statements

In addition, Peter Van Valkenburgh, Research Director of the cryptocurrency advocacy group Coin Center, voiced objections, stating that Warren's remarks contain incorrect or misleading content.

Incorrect: Cryptocurrencies Do Follow the Same Anti-Money Laundering Rules

Valkenburgh pointed out that according to guidance from the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury Department issued in 2013, cryptocurrencies have long complied with anti-money laundering regulations:

In fact, over the past 11 years, cryptocurrency activities have been subject to the exact same anti-money laundering rules as traditional financial activities, and these rules are often enforced, including user identification KYC and reporting financial transactions under the Bank Secrecy Act.

However, he also mentioned that individuals transacting with personal wallets are not bound by the Bank Secrecy Act; however, those using cash and other financial instruments may also not be subject to its regulations.

Misleading: Lack of Background on the Scale of Cryptocurrency Money Laundering

Furthermore, Valkenburgh pointed out that Warren's tweet did not provide more background information on the scale of money laundering using cryptocurrencies, merely implying a personal stance that cryptocurrencies are superior to traditional financial tools for evading sanctions:

However, that's not how the Treasury Department's report puts it; it's fiat currency.