The United States, United Kingdom, and Australia have imposed sanctions on individuals and entities allegedly facilitating cryptocurrency transactions for Hamas, a Palestinian militant group that the U.S. and European Union consider a terrorist organization.
“Hamas has sought to leverage a variety of financial transfer mechanisms, including the exploitation of cryptocurrency, to channel funds to support the group’s terrorist activities,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Treasury, in close coordination with our allies and partners, will continue to leverage our authorities to target Hamas, its financiers, and its international financial infrastructure.”
The sanctions, announced on January 22, 2024, reflect a concerted effort by governments to clamp down on the illicit use of digital assets, which have been praised for their potential to democratize finance but also criticized for their role in illegal activities.
According to a United Nations report published last week, USDT, the largest stablecoin in the world by market capitalization issued by Tether, is growing in popularity in the underground banking and money laundering infrastructure in East and Southeast Asia.
Tether’s ease of transfer and widespread acceptance have reportedly made it a magnet for those looking to obscure the origins of illicit funds.
Tether has responded to the intergovernmental organization in a blog post, stating its disappointment in the UN singling out the stablecoin’s use in illicit activities while “ignoring its role in helping developing economies in emerging markets.”
“The UN’s analysis ignores the traceability of Tether tokens and the proven record Tether has of collaborating with law enforcement. Rather than focusing solely on risks the UN should also discuss how centralized stablecoins can improve anti-financial crime efforts,” the stablecoin issuer said.