Cryptocurrencies are "tailor-made" for foreign powers hoping to influence American elections, a security consultant told a group of U.S. senators on Tuesday.

Scott Dueweke, director of threat analysis company DarkTower, was one of several witnesses appearing before the Senate Subcommittee on Crime and Terrorism to discuss the potential use of cryptocurrencies by foreign agents in order to influence American elections. He argued that lawmakers must focus on identity solutions to prevent undue foreign influence on upcoming elections.

"There is a global shell game being played now," by people hoping to bypass financial disclosure rules, he said. As a result, they are purchasing political advertisements and donating to certain parties in efforts to influence elections.

Dueweke added:

"They exchange one form of money for another … fiat currency in and fiat currency out, but in between you're going to have these multiple layers of cryptocurrency that are going to be impossible to track."

Another witness, Financial Integrity Network vice president David Murray, noted that cryptocurrencies can be used by foreign entities to avoid detection when donating to political parties or politicians.

He contrasted the use of cryptocurrencies with donations made through financial institutions.

"When donors use financial intermediaries such as banks to execute donations, the location of the financial intermediary is a data point that campaigns can use to identify foreign donors," he explained.

Senator Sheldon Whitehouse, the ranking Democrat on the subcommittee who lead the questions during the hearing, said that "cryptocurrency can be used for money laundering in elections," and therefore pose a "host of challenges for Congress and regulators."

He considered the idea of using legislation to enforce more stringent identity requirements on individuals donating to a political campaign – a push that Dueweke argued is crucial.

"Combining better forensics to understand the source of funds, tied to stronger identity attribution for those placing political ads is critical," Dueweke said. "We have to be able to identify the people that are fanning these flames."

Scott Dueweke image via Senate Subcommittee on Crime and Terrorism 

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