Pfluger Opening Statement in Terrorism and Cryptocurrency Hearing

WASHTINGTON, DC – Rep. August Pfluger (R-TX), Ranking Member of the Intelligence and Counterterrorism Subcommittee, delivered the following opening statement in a subcommittee hearing entitled, “Terrorism and Cryptocurrency: Industry Perspectives.”

Ranking Member Pfluger’s Opening Statement (as prepared for delivery)

Thank you, Madam Chair. I appreciate you holding this hearing today and would like to thank our witnesses from Chainalysis, the Blockchain Association, and Coinbase. I look forward to a productive conversation on innovative solutions that we can use to safeguard against terrorists and other adversaries use of crypto as a tool to evade the rule of law.

The battle against terrorist financing and illicit activity is not a new one, but the creation of cryptocurrency has introduced additional complications to that fight. Cryptocurrency can provide security and anonymity in financial transactions, making it an alluring tool for nefarious actors. Chainalysis reported that in 2021, illicit addresses received $14 billion through cryptocurrency – an all-time high. Between ransomware payments, the darknet market, sanctions evasion, and terrorism financing, we are combatting bad actors from multiple angles.

Congress is notorious for being one step behind when it comes to new technologies, but we cannot afford to play catch-up when it comes to any of these issues. That is why we are meeting with industry leaders today – to understand the full scope of the challenges and find innovative solutions that will close the small, but profitable gap in cryptocurrency that is being used for illicit activity. At the end of this hearing, I hope to understand what we should expect going forward – what trends are we seeing in terms of terrorist use of cryptocurrency and how can we crack down on the billion-dollar profits nefarious actors are making from illicit cyber activity.

Given the global threat picture, we also cannot overlook the foreign nation states who are attempting to use crypto as a way to line their own pockets – essentially evading sanctions. I’d like to hear more from the panel about Iranian efforts to utilize crypto mining and understand what the outlook is for Russian’s use of similar methods. What steps are being taken in the private sector to ensure that crypto isn’t a back door to America’s use of soft power at a time when sanctions enforcement is an important tool to our foreign policy.

With that said, it is imperative that we remember – regulation should not be implemented hastily. As legislators it’s incumbent upon us to protect our constituents and the American way of life while supporting private sector growth and the U.S. economy. We must pursue the least burdensome path while ensuring the nation’s safety and security.

I look forward to our discussion today and hope that this Committee can support the public- private partnerships necessary to combat terrorist and other illicit financing via cryptocurrency. Our witnesses are not only leaders in the private sector, but they also have government backgrounds that will give them the experience to craft common sense reforms with our committee. This is a new frontier for the security of our homeland, and it is vital that we are working hand in glove to understand the threat and mitigate against it.

I thank our witnesses for appearing before the subcommittee today, and I look forward to a robust conversation. Madame Chairwoman, I yield back the balance of my time.

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