National security organizations are urging Congress to view cryptocurrencies through the lens of national security rather than simply as economic matters.
The Senate is deliberating a bill designed to enhance regulations surrounding digital currencies, both in the U.S. and abroad. While these discussions progress, POLARIS National Security has released a memo, exclusively obtained by the Daily Caller News Foundation, suggesting five key policy actions for the government.
“Although traditional methods still dominate illicit finance on a global scale, the rapid rise of cryptocurrencies presents unique challenges, including speed and ease of international transactions, which reduce reliance on the conventional banking system,” said Sebastian Borda, Executive Director of POLARIS National Security. “This isn’t yet a major avenue for illicit finance, but its development raises significant national security alarms.”
The memo also calls for expanded enforcement mechanisms against sanction evaders, increased surveillance of adversary nations, and measures to close loopholes that facilitate the movement of illicit funds through offshore accounts.
“Criminals often disguise the origin of their funds through complex layers, making pinpointing the issue difficult,” Borda noted. “Thus, it’s crucial for the U.S. to ensure that platforms and exchanges under its jurisdiction don’t become vulnerable links in this chain.”
The core recommendation from the policy suggestions is that cryptocurrency firms operating in the U.S. should adhere to the same regulations as banks.
Moreover, ransomware attackers frequently utilize cryptocurrencies for transactions that evade law enforcement and banking scrutiny, according to the POLARIS report.
The U.S. government has actively targeted cryptocurrencies that adversaries prefer, with recent actions involving the freezing of Iranian assets.
“The Treasury Department’s Office of Foreign Assets Control has sanctioned several wallets connected to Iran, leading to the freezing of approximately $344 million in digital currencies,” Treasury Secretary Scott Bessent stated. “We aim to follow the funds that the Iranian government is trying to move and cut off all financial routes tied to their regime.”
Earlier in the Russia-Ukraine conflict, the Treasury Department announced asset freezes against Russia starting on February 28, 2022. A later Treasury report indicated these assets were estimated at around $300 billion, attracting considerable criticism from countries like China, Russia, and India.
A report from the U.S. Government Accountability Office revealed that sanctions have not effectively disrupted Russia’s war efforts.
“While we noted a decline in Russia’s economy following the 2022 invasion and sanctions, there has been a small rebound,” the report stated. “Export controls limit, but do not fully prevent, access to vital technology for war efforts.”
The Trump administration generally showed a favorable stance towards cryptocurrencies, with a presidential order in January 2025 promoting the growth and development of digital assets.
The order articulated the administration’s commitment to supporting responsible digital asset growth across various economic sectors.
In recent years, cryptocurrencies have been used by countries like North Korea, Russia, and Iran to bypass economic sanctions.
Seizing cryptocurrencies from a sovereign state is considered a violation of international law. Still, it is apparent that bad actors exploit cryptocurrencies for unlawful activities.
There have also been discussions involving Jeffrey Epstein about the potential use of a “digital currency that complies with Islamic law” by Muslims in the Middle East.
