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Cyber ​​attackers hold hostage data and computer systems in American businesses, schools and hospitals until they receive digital payments from their victims, making cryptocurrency a key component of the ransomware gangs’ business model.

Congress is now trying to figure out whether cryptocurrency is fueling the rapid spread of ransomware attacks and trying to impose new rules on the digital currency business.

Senator James Lankford, a Republican from Oklahoma, said the Biden administration’s handling of cryptocurrency was mixed, involving more than five different institutions with jurisdiction over cryptocurrency matters, causing confusion.

“This is still a complex mess for a company, a hospital, whatever ransomware is attacked, at the worst possible moment,” Mr. Lankford said at a National Security Committee session on Tuesday. “And now they’re being bombarded by all these different federal agencies that call them and ask for information and details about it. There has to be one source, I know we’re in the process of figuring this out.”

Jacqueline Burns Koven, head of cyber threat intelligence at blockchain financial services firm Chainalysis, said that cryptocurrency companies and exchanges also help catch cyberattacks.

“It can be much easier to investigate cases involving the illegal use of cryptocurrency than other forms of payment,” Ms. Koven told lawmakers. “By detecting an illegal actor’s cryptocurrency wallet, for example from a ransom payment, law enforcement can gain insight into not only the cash-out target, but also the network of accomplices and malicious tools supporting the threat actor’s campaign.”

Ms. Koven said traditional financial crime investigations that examine bank accounts are resource-intensive and time-consuming, require subpoenas and bring less information than examining digital ledgers and transactions.

Some lawmakers have expressed skepticism about the utility of cryptocurrency outside of criminal organizations.

“Those who use this currency are criminals,” said Gary Peters, a Michigan Democratic Senator. “In addition to speculators, criminals who appear to be using crypto.”

Cryptocurrency analysts disagree. Ms. Koven said that legitimate transactions take place outside of criminal activity and people often adopt the practice of accepting cryptocurrency for their business and services.

While cryptocurrency regulation is not guaranteed, there are a few different paths Congress can choose to follow.

For example, Know Your Customer or KYC requirements can be applied to cryptocurrency businesses so that financial service professionals have detailed information about their customers. This could force cryptocurrencies to make additional disclosures to combat money laundering.

New Hampshire Democrat Senator Maggie Hassan said the IRS has recommended increasing KYC requirements for cryptocurrency businesses.

Other lawmakers are also watching the new cryptocurrency laws.

You s. Kirsten Gillibrand, New York Democrat, and Cynthia Lummis, Wyoming launched the Responsible Financial Innovation Act to create a new regulatory framework for digital assets.

The Biden administration did not wait for Congress to set new rules on the agenda that govern cryptocurrency. Last year, the Treasury Department announced sanctions on SUEX, a Russian cryptocurrency exchange, for allegedly facilitating payments to cybercriminals.

After Russia invaded Ukraine, the Biden administration imposed additional sanctions affecting Russians and people with Russian connections. Last month, Rob Joyce, director of cybersecurity for the National Security Agency, suggested that the cumulative effect of sanctions is reducing ransomware attackers. reports.

Private cybersecurity experts are less sure that sanctions reduce ransomware attacks.

“We know that ransomware incidents involving public sector assets in the US have decreased this year, but that’s all we know,” Emsisoft threat analyst Brett Callow said on Twitter last week.