The US Treasury Department Seeks More Authority to Crack Down on Illicit Actors in Crypto
The US Treasury Department has requested Congress to grant it additional authority to target illegal actors in the cryptocurrency space, including those located overseas. Deputy Treasury Secretary Wally Adeyemo emphasized the need for a secondary sanction regime that would not only cut off a firm from the US financial system but also expose any firm doing business with the sanctioned entity to the same consequences.
One of the primary motivations behind this request is to prevent groups like Hamas from finding safe haven within the digital asset ecosystem. In light of recent militant attacks, terrorism financing has become a significant concern.
US Treasury Proposal Targets Virtual Asset Service Providers (VASPs)
The proposal put forth by the US Treasury seeks to enable the targeting of cryptocurrency entities and services that facilitate terrorist funding. This would involve creating a new category of financial institutions under the Bank Secrecy Act (BSA), which would include cryptocurrency exchanges, VASPs, virtual asset wallet providers, blockchain validator nodes, and decentralized finance services.
These companies would be required to comply with stringent anti-money laundering measures. Additionally, Adeyemo emphasized the importance of imposing measures to prevent potential terrorist usage of dollar-backed stablecoins, particularly for providers outside the US.
Hot Take: Stricter Regulations to Combat Terrorism Financing in Crypto
The US Treasury Department has called on Congress to grant it more authority to crack down on illicit actors in the cryptocurrency space, both within and outside the US. The proposal aims to establish a secondary sanction regime that would cut off firms from the US financial system and impose similar consequences on any firms conducting business with sanctioned entities.
By creating a new category of financial institutions under the Bank Secrecy Act, the Treasury Department seeks to hold cryptocurrency exchanges, VASPs, and other service providers accountable for facilitating terrorist funding. These measures are crucial to prevent groups like Hamas from exploiting the digital asset ecosystem for terrorism financing.
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