Treasury Department’s Request for Enhanced Authority
The U.S. deputy secretary of the Treasury, Wally Adeyemo, announced that the Treasury Department has asked Congress for additional tools and authorities to combat illicit activities in the digital asset space. He emphasized the need to modernize illicit finance authorities in order to address the challenges presented by the evolving digital asset ecosystem.
Treasury’s Priorities in the Crypto Space
During the Blockchain Association’s Policy Summit, Adeyemo outlined the Treasury’s key priorities in dealing with illicit actors in the cryptocurrency industry. He called on Congress to establish a secondary sanction regime that would not only cut off a firm from the U.S. financial system but also expose any firm continuing to do business with a sanctioned entity to the same risk.
Targeting Illicit Actors in the Digital Asset Ecosystem
The Treasury has provided Congress with recommendations to expand its authorities and resources to go after illicit actors in the digital asset space.
In line with this objective, the Treasury recently imposed sanctions on Sinbad.io, a crypto mixer serving as a money-laundering tool for a North Korean-sponsored cyber hacking group. Sinbad facilitated the processing of millions of dollars in cryptocurrency from cyber hacks, enabling cybercriminals to conceal illicit transactions.
Addressing Challenges and Creating Accountability
The Treasury seeks to develop new sanctions tools targeted at actors in the digital asset ecosystem and update its illicit finance authorities.
Adeyemo stressed the need for a shared commitment between the digital asset industry and the government to prevent illicit finance. He urged the industry to collaborate with the government, design new tools, and work towards protecting digital assets from abuse by transnational criminal organizations, terrorists, and rogue states.
Regulatory Approach and Global Cooperation
The Treasury official expressed concerns about dollar-backed stablecoin providers outside the United States, emphasizing the need for them to establish procedures preventing the abuse of their platforms by terrorists. Adeyemo also highlighted the importance of offshore financial services providers complying with U.S. laws instead of evading jurisdiction. The Treasury is committed to working with Congress and the Financial Action Task Force (FATF) to ensure a comprehensive regulatory approach globally.
Hot Take: Treasury Calls for Enhanced Authority to Combat Illicit Actors in the Digital Asset Space
The U.S. Treasury Department has requested increased tools and authorities from Congress to address illicit activities in the digital asset ecosystem. By targeting illicit actors, updating illicit finance authorities, and promoting industry-government collaboration, the Treasury aims to prevent terrorist groups and cybercriminals from exploiting digital assets. The department recently imposed sanctions on Sinbad.io for its involvement in money laundering for a North Korean hacking group. The Treasury also highlighted the importance of preventing dollar-backed stablecoin providers outside the U.S. from facilitating terrorist financing. To ensure effectiveness, the Treasury seeks not only domestic cooperation but also global alignment in regulatory practices.
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