During a Senate hearing on April 9, Senator Tim Scott criticized the current US administration for unfairly targeting digital assets as the main culprit in combating terrorism financing. He argued that this focus overlooks more substantial traditional sources of funding, particularly those benefiting Iran.

Speaking to Deputy Treasury Secretary Adewale Adeyemo, Scott expressed concerns about the Treasury's exclusive emphasis on gaining expanded authority over cryptocurrencies to the Senate Committee on Banking, Housing, and Urban Affairs. He contended that this narrow focus disregards significant sources of terrorism funding, such as Iran's substantial oil exports and relief waivers, which Scott claims enable the Iranian government's misuse of funds.

Scott asserted that the attention on cryptocurrency overlooks the larger scope of illicit financing, labeling it as the "elephant in the room."

In response, Deputy Treasury Secretary Adeyemo defended the focus on digital assets, citing the challenges posed by the current lack of authority in restricting crypto transactions compared to traditional financial transfers. He highlighted specific challenges associated with crypto, including the use of stablecoins by Russia to evade sanctions and the reliance of North Korea on mixers to obscure financial transactions.

Adeyemo outlined the Treasury's request for additional powers over crypto, which was proposed in November. This proposal aims to introduce secondary sanctions against foreign crypto providers, tighten existing regulations, and address risks posed by international crypto platforms.

Adeyemo also addressed Scott's concerns regarding the abuse of humanitarian funding, reaffirming the US's commitment to humanitarian relief despite Iran's misuse of funding.

During the hearing, other senators expressed support for enhanced oversight of digital assets, emphasizing the need for tighter regulations in the sector. Committee Chairman Sherrod Brown stressed the importance of crypto platforms adhering to the same regulatory standards as traditional financial institutions in combating terrorist financing.

Senator Bob Menendez raised concerns about Iran potentially converting oil proceeds to crypto, prompting Adeyemo to reiterate the necessity for more comprehensive authority over the sector.

Senator Elizabeth Warren also contributed to the discussion, highlighting Iran's role as a blockchain validator and its potential to earn millions in transaction fees, including from US transactions. Warren called for extending financial institution regulations to blockchain validators to prevent abuse.