‘Pass stablecoin legislation now:’ Exec on concerns over illicit financing

  • Coinbase CLO urges swift action to address illicit finance concerns.
  • U.S. Treasury Deputy Secretary highlights increasing terrorist reliance on virtual assets.

Stablecoins serve as crucial connectors between the traditional money system and the digital currency world, maintaining a consistent value tied to the US dollar. With increasing popularity comes growing apprehension regarding potential misuse in illicit financing.

In response to this topic, Paul Grewal, the Chief Legal Officer of Coinbase, expressed his thoughts in a recent social media update on X (previously known as Twitter).

It’s indisputable that taking action against the minimal portion of illicit financing (IF) involving digital assets requires immediate passage of stablecoin legislation.

The involvement of politics and terrorist groups  

The comments from the Coinbase executive surfaced following the announcement that the Senate Banking Committee would be conducting a hearing on preventing illegal financing, terrorism funding, and evading sanctions on April 9th.

Highlighting the significance of tackling crucial matters devoid of political interference, Grewal pointed out.

“The safety and stability of dollar-backed digital currencies, or stablecoins, benefit US security. Placing these stablecoins in the United States can be achieved with clear regulations and mechanisms, if we are willing to go beyond political debates.”

In his written statement to the congressional committee, Adewale O. Adeyemo, the Deputy Secretary of the U.S. Treasury Department, further discussed the issue of cryptocurrencies being misused by terrorist organizations.

About five years ago, networks of terrorists linked to al-Qaeda, primarily operating from Syria, set up a bitcoin laundering scheme through social media. They used these platforms to ask for cryptocurrency contributions.

He further added, 

Lately, within the last year, there have been reports of the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) sending cryptocurrencies as financial support to Hamas and the Palestinian Islamic Jihad (PIJ) based in Gaza.

Terrorist groups tend to use conventional financial methods at present, but without Congressional intervention, they might turn more to digital currencies instead.

Stablecoins instead of Bitcoin ETF 

In light of increasing interest in regulating stablecoins, Markus Thielen, founder of 10x Research, brought attention to this topic in a report released on April 8th.

“Instead of focusing too much on bitcoin ETF transactions, consider the growing influence of stablecoin issuers, who are currently fueling the market’s upward trend.”

According to Forbes’ most recent report, the total value of stablecoins is currently $155.55 billion. This represents a very slight decrease of 0.01% over the past 24 hours. Meanwhile, Tether’s market cap grew by 0.25% during this period, while USDC experienced a larger decline of 1.16%.

The increase in stablecoin supply strongly suggests growing demand, highlighting this trend. Could it be that the cryptocurrency market’s bullish momentum is outpacing Bitcoin ETF investments?

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2024-04-09 23:36