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Committee chairman Sen. Sherrod Brown (D-OH) confers with ranking member Sen. Tim Scott (R-SC)

What we’re watching in the Senate sanctions hearing today

The Senate Banking Committee convenes this morning to examine the illicit finance that helped fund the deadly Oct. 7 Hamas attack on Israel and weigh potential future sanctions.

It’s a high-stakes hearing for Chair Sherrod Brown (D-Ohio). There’s bipartisan interest in the upper chamber in some kind of repercussions for Iran, a longtime backer of Hamas, though U.S. officials have said they do not have evidence Iran was directly involved in the planning.

The White House has already re-frozen $6 billion in Iranian assets that were set to be released as part of a prisoner swap. We reported Wednesday that Brown doesn’t think Congress needs legislation to codify that freeze, though his committee’s top Republican, Sen. Tim Scott (R-S.C.), proposed a bill to do just that earlier this month.

Otherwise, Brown appears to be keeping his options open. “Senator Brown is reviewing all legislation related to Iran sanctions” and today’s hearing will “determine next steps and possible legislation,” spokesperson Alysa James said.

Scott and other Banking Republicans will slam the Biden administration’s approach this year to Iran. We’ll also hear broader discussions about possible sanctions. “It will be a good discussion about what options are available to us,” Sen. Mike Rounds (R-S.D.) said.

There’s also bipartisan pressure to address the role that crypto may have played in financing the Hamas attacks and other bad actors around the world. The latest push has been driven by Sen. Elizabeth Warren (D-Mass.), who told us Wednesday it was past time for crypto to face stronger money laundering rules.

“I’m always open to hearing other ideas for how we can constrain the flow of funds,” Warren said. “But it shouldn’t be an either-or – we need to shut down the crypto flow, and if there are other tools we need to use in other areas, let’s put them on the table and take a look.”

Brown’s opening remarks will also say lawmakers “need to crack down on the use of crypto to fund terrorism and evade sanctions.”

In the meantime, the crypto industry has strongly disputed that crypto played a crucial role in Hamas funding before this month’s attack. On Wednesday, the blockchain analytics firm Elliptic published a lengthy statement arguing that a widely-cited Wall Street Journal story had “misinterpreted” its data to suggest Hamas used millions of dollars in crypto in the period leading up to the attack.

Meanwhile in the House: Rep. Andy Barr (R-Ky.) is leading a fresh letter to the Federal Reserve today that will blast the U.S. central bank’s approach to capital reform.

Barr’s letter tracks with what the banking industry has been saying for some time now. Lawmakers will complain to Vice Chair for Supervision Michael Barr about “the lack of analysis” presented in the proposal.

“[Y]ou testified that any proposed additional capital requirements would need to be justified,” the lawmakers write. “However, to date, we have yet to see that justification.” Read the full letter here.

— Brendan Pedersen

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