During a Senate hearing on April 9, Senator Tim Scott accused the Biden administration of using digital assets as a diversion to address terrorism financing while overlooking more substantial and conventional sources of funding, especially benefiting Iran.

He criticized the Treasury's exclusive push for greater control over cryptocurrencies during a Senate committee meeting, highlighting concerns about how this strategy sidelines other significant sources of terrorism funding, such as Iran's oil exports and US-hostage relief, which he believes facilitates misuse of funds by the Iranian government.

In response to Scott's critique, Deputy Treasury Secretary Adeyemo defended the focus on digital assets, emphasizing the challenges in regulating crypto transactions compared to traditional financial transfers. He noted specific hurdles related to crypto, including Russia's use of stablecoins to evade sanctions and North Korea's utilization of mixers to conceal financial activities.

Adeyemo outlined the Treasury's request for increased authority over cryptocurrencies made in November, aiming to enforce secondary sanctions on foreign crypto providers, enhance existing regulations, and tackle risks associated with international crypto platforms.

The discussion on enhancing oversight of digital assets received additional support from other senators, with Committee Chairman Sherrod Brown emphasizing the importance of crypto platforms adhering to regulatory standards similar to traditional financial institutions, particularly in the fight against terrorist financing. Senator Bob Menendez raised concerns about Iran potentially converting oil proceeds into crypto, leading to a revisit of the necessity for broader authority over the crypto sector.

Senator Elizabeth Warren highlighted Iran's position as a blockchain validator that earns substantial transaction fees, suggesting the extension of financial institution regulations to blockchain validators to mitigate exploitation risks.