The US Treasury Deputy Secretary Calls for Stronger Crypto Regulation to Combat Illicit Finance
In a recent hearing before the Senate Banking, Housing, and Urban Affairs Committee, the US Treasury Deputy Secretary, Wally Adeyemo, emphasized the growing concern of terrorist groups and state actors like Russia and North Korea using virtual assets to conceal their identities and transfer resources. While some progress has been made in detecting illicit financial activities, Adeyemo stressed the urgent need to enhance enforcement measures to prevent malicious actors from exploiting cryptocurrencies and digital assets.
Here are the key points highlighted by Adeyemo:
- Adeyemo warns about the increasing use of virtual assets by malicious groups
- North Korea and Russia are cited as examples of countries utilizing cryptocurrencies for illicit activities
- He calls for legislative action to strengthen tools targeting foreign digital asset providers involved in illicit finance
- Adeyemo urges Congress to pass laws to cover new entities like virtual asset wallet providers and crypto exchanges
Addressing Regulatory Gaps and Jurisdictional Risks
Adeyemo also highlighted the significance of closing regulatory loopholes and expanding authorities to oversee emerging entities like virtual asset wallet providers and cryptocurrency exchanges that have evolved post the enactment of existing regulations. Additionally, he underscored the need to mitigate jurisdictional risks posed by offshore crypto platforms to uphold US national security.
Key points raised by Adeyemo in this regard include:
- Closing regulatory gaps in the digital asset market
- Extending authorities to cover new entities in the crypto space
- Emphasizing the importance of safeguarding US national security from offshore crypto platforms
Industry Calls for Stablecoin Regulation
Leading cryptocurrency firms like Coinbase Global and Circle Internet Financial have joined the call for regulatory reforms to enhance stability in the digital asset market. They have urged policymakers to focus on regulating stablecoins and improving the overall market structure to prevent risks associated with regulatory arbitrage and lack of clarity.
Here are the key points highlighted by Coinbase Global and Circle Internet Financial:
- Request for regulations governing stablecoins
- Proposal to improve the structure of the digital asset market
- Concerns regarding regulatory arbitrage and need for AML and sanctions regulations expansion
UN Report Raises Concerns About Tether’s Role in Illicit Financing
A recent United Nations report shed light on Tether’s involvement in cyber fraud and money laundering activities in Southeast Asia. The report highlighted the increased use of Tether by sophisticated money laundering syndicates operating in the region, especially within the realm of online gambling platforms engaged in illicit activities.
The key takeaways from the UN report on Tether’s role in illicit financing include:
- Observation of rapid growth in high-speed money laundering teams using Tether
- Prevalence of USDT in cryptocurrency-based money laundering on illegal online gambling platforms
- Tether’s response to allegations and its collaboration with law enforcement agencies
Support for Enhanced Monitoring and Law Enforcement Collaboration
Tether has refuted the claims made in the UN report by highlighting its cooperation with global law enforcement agencies such as the Department of Justice, the FBI, and the USSS. The company emphasized its commitment to monitoring and tracing transactions to surpass traditional banking systems’ capabilities, aiming to combat illicit activities effectively.
The Hot Take on Crypto Regulation and Illicit Finance
In the wake of growing concerns over the exploitation of cryptocurrencies for illicit finance, regulatory bodies and industry players are uniting to push for more robust measures to combat malicious activities. By addressing regulatory gaps, extending authorities, and enhancing monitoring capabilities, stakeholders aim to strengthen the integrity of the digital asset market and safeguard national security.
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