A few weeks ago, I testified before the U.S. House of Representatives on the implications of the United States launching a central bank digital currency. The hearing was pretty standard, but there was one exchange with Rep. Bill Foster (D-IL) that resonates even more now that Senator Elizabeth Warren (D-MA) is escalating her crypto crime campaign.

During the hearing, I responded to one of Foster’s questions by saying that I do believe people should be able to have private transactions. Foster then tried to portray my position as being in favor of preserving “the system that allows ransomware to exist.”

To clarify and expand on my brief response: I am not in favor of ransomware, crime, or terrorist attacks. Rather, I am in favor of a system where the Fourth Amendment to the U.S. Constitution serves as the appropriate balance between privacy and law enforcement investigations.

That is, if law enforcement can demonstrate probable cause to obtain a valid search warrant, then they should be able to access a potential criminal’s financial information. Put differently, I do not believe that criminals or terrorists should be able to hide behind some kind of impenetrable privacy shield.

I’m still amazed when people portray that position as radical. But it does provide the opportunity to point out that U.S. citizens effectively lost their financial privacy Fourth Amendment rights after Congress passed the Bank Secrecy Act in 1970. (And the 1978 Right to Financial Privacy Act didn’t really fix the problem.)

Getting back to Rep. Foster’s comments, I’m also not a fan of preserving “the system that allows ransomware to exist.” The problem with Foster’s assertion, though, is that cryptocurrency-based payments systems do not allow ransomware to exist. The same goes for the traditional payments system. And, for that matter, cash.

All kinds of crime, including extortion, would exist if crypto didn’t exist.

Fortunately, most people are not criminals. Unfortunately, America’s anti money laundering laws haven’t been crafted based on this fact. Instead, the United States government has imposed an elaborate set of regulations on everyone who uses the traditional payments system.

It’s at least plausible that this approach might not be the most effective way to fight crime, but there’s no need to speculate. For the last 50 years, under the ever-expanding Bank Secrecy Act regime, the government has been making it more difficult for law-abiding citizens to use the traditional payments system. And it hasn’t done much more than cost billions of dollars and produce an untold number of worthless reports.

But that failure hasn’t stopped elected officials such as Senator Warren from trying to expand the AML regime to cryptocurrency. And considering that she’s spent years throwing everything she can at crypto, perhaps her efforts are more reflective of a dislike for the private sector than anything else.

In 2017, Warren was worried about “consumers getting hurt” because of crypto’s “history of extreme volatility.” In 2018, she was concerned that investors were being scammed through initial coin offerings.

In a March 2022 hearing, she desperately tried to stop Jony Levin, cofounder of Chainalysis, from explaining that crypto is not a great way to make anonymous transactions, even when using mixers and digital wallets without identifying information. She didn’t care that Levin’s company had helped identify potential criminals for law enforcement, and six months later, at another hearing, came incredibly close to calling Levin a liar.

In December 2022, Warren introduced the Digital Asset Anti‐​Money Laundering Act. She claimed that “crypto has become the preferred tool for terrorists, for ransomware gangs, for drug dealers, and for rogue states that want to launder money.” Of course, her bill would merely amend U.S. law, but let’s leave that aside for now.

Just this week, she penned a letter, with 28 other senators and 76 members of the House, urging the Biden administration to “crack down following reports that Hamas raised funds via digital currency.” Their concern is admirable, but the administration, just like everyone else paying attention, is already aware Hamas has raised funds using crypto.

In fact, the Biden administration released an illicit finance risk assessment in April 2023. The report states that most illicit activity uses traditional payments systems, not crypto. It says, “As previously noted in the 2022 NRAs [national risk assessments], this risk assessment recognizes that most money laundering, terrorist financing, and proliferation financing by volume and value of transactions occurs in fiat currency or otherwise outside the virtual asset ecosystem via more traditional methods.”

Nonetheless, the letter expresses the signees’ “grave concern regarding reports that, in the months leading up to their brutal and horrific October 7th attack on Israel, Hamas and Palestinian Islamic Jihad (PIJ) raised millions of dollars in crypto–evading U.S. sanctions and funding their operations.” Again, their concern is warranted. However, it’s no secret that the U.S. and Israeli governments, for years, have been freezing, seizing, and disrupting these terrorist groups’ crypto funding.

The rest of their funding is a bigger problem. For multiple reasons.

In May 2022, Treasury “designated a Hamas finance official” and an “expansive network of three Hamas financial facilitators” as well as six other companies that raised money for Hamas “through the management of an international investment portfolio.” According to Matt Levitt, a former U.S. official who specialized in counterterrorism, Hamas has a budget of more than $300 million, the bulk of which comes from “taxes on business, as well as from countries including Iran and Qatar or charities.”

Given that the United States government has been isolating Iran and Hamas from the financial system for decades, Warren and her colleagues should be asking the Biden administration how Hamas has a $300 million budget and access to an international investment portfolio. Perhaps the international component of fighting illicit financial flows hasn’t worked so well?

Either way, it’s difficult to see how restricting the legitimate use of crypto in the United States is going to stop Hamas. And Warren’s bill, for what it’s worth, would do more than further infringe on Americans’ financial privacy. It would also impose possibly unworkable requirements on users of self‐​hosted wallets, and on the operators of technological infrastructure that don’t interface with people making crypto transactions.

Her bill would do nothing to address specific acts of crime or violence, or even the fraud that occurred with Sam Bankman-Fried’s FTX. But it would undoubtedly help expand federal control over the payments system, and most likely ensure that people develop crypto technologies outside of the United States.

There is no doubt crypto is used for crime. The same goes for the U.S. dollar, the euro, cell phones, and a host of other financial and nonfinancial instruments. All crime should be taken seriously, but it makes no sense to respond to acts of crime or violence by making it virtually impossible for law‐​abiding citizens to use any of these instruments.

In a perfect world, elected officials wouldn’t use incidents of horrific violence against innocent people to push a political agenda that expands their power and control. That’s probably too much to hope for, but that’s why we have things like the Fourth Amendment. Congress should affirm the Fourth Amendment while remaining neutral towards people’s choices of payment methods.