The US Treasury Department Explores Sanctions in the Crypto Space
The United States Treasury Department is considering the use of new sanctions tools to target malicious actors in the cryptocurrency industry, following a recent settlement with Binance. Wally Adeyemo, the deputy secretary of the Treasury, revealed this during the Blockchain Association’s Policy Summit. Adeyemo stated that his department had requested Congress to allow sanctions that would completely cut off an entity from the US financial system. The objective is to prevent groups like Hamas from finding refuge within the digital asset ecosystem. Adeyemo also mentioned Binance’s involvement in facilitating illegal activities such as child sexual abuse, narcotics trafficking, and terrorism.
Collaboration with Financial Companies and Targeting Stablecoin Providers
Adeyemo emphasized the need for coordination between the US government and financial institutions to combat money laundering, fraud, and terrorism financing. He suggested that stablecoin providers based outside the US could become targets as authorities work towards closing regulatory gaps. This statement aligns with recent actions taken by the US Treasury’s Office of Foreign Assets Control, which imposed sanctions on crypto mixer Sinbad for allegedly facilitating money laundering for North Korea-based Lazarus Group. Additionally, Binance reached a settlement with US authorities involving a $4.3 billion agreement and CEO Changpeng Zhao stepping down.
Updating Illicit Finance Authorities for the Digital Asset Era
Adeyemo called for updated illicit finance authorities to address the challenges posed by the evolving digital asset ecosystem. He emphasized that relying on outdated statutory definitions would not effectively mitigate illicit finance risks in 2023. In August, the US Treasury released draft rules aimed at addressing reporting and tax payment difficulties related to cryptocurrency transactions. However, these proposals have faced criticism due to their impractical reporting requirements for brokers, set to take effect in 2026.
Hot Take: US Treasury Expanding Sanctions to Counter Crypto Crimes
The US Treasury Department’s exploration of new sanctions tools to combat illicit activities in the crypto space signifies a growing concern over the misuse of digital assets. By targeting entities involved in money laundering, fraud, and terrorism financing, the Treasury aims to safeguard the integrity of the US financial system. The recent settlement with Binance and the imposition of sanctions on Sinbad demonstrate the government’s commitment to holding bad actors accountable. However, there is a need for updated regulations and coordination with financial companies to effectively address the challenges posed by the rapidly evolving digital asset ecosystem.
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