US Treasury Seeks Power to Implement More Sanctions on Crypto Exchanges

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The US Treasury Department aims to strengthen its control over cryptocurrency exchanges operating within the country. According to a recent Bloomberg article, the department is pushing for additional sanctions against foreign entities supplying crypto services, with the primary goal being to safeguard the country’s security.

At the Senate hearing on April 9, Tuesday, Treasury Deputy Secretary Adewemo made this statement in writing:

“Actors are becoming more adept at concealing their true identities and transferring funds through virtual currencies, posing a growing challenge for us.”

Malicious actors such as terrorists continuously look for innovative methods to transfer their funds, in response to our efforts to restrict their use of conventional financial systems.

The US Treasury Department added that Iran’s Quds Force is reportedly using cryptocurrencies to financially support the militant groups Hamas and Palestinian Islamic Jihad based in Gaza. The Department has previously taken steps to disrupt these funding channels, including those handling smaller contributions to Hamas.

Adeyemo added that Russia and North Korea are growing more reliant on cryptocurrencies for money transfers. Notably, these countries have been actively employing stablecoins in an attempt to bypass US restrictions.

Broadening US Treasury’s Sanctions Power on Crypto Exchanges

In December 2023, a bipartisan group of US senators presented a bill to expand the Treasury Department’s ability to impose sanctions against terrorist organizations, such as Hamas. The Treasury had previously suggested measures aimed at strengthening its counter-terrorist financing regulations.

During his testimony, Adeyemo suggested three major reforms. These reforms include:

The US Treasury can stop transactions involving suspicious foreign institutions from being processed through American accounts. In contrast, unlike banks that utilize correspondent accounts for most of their transactions, foreign crypto exchanges and specific money service businesses operate independently of this requirement.)

A secondary sanctions toll suggested by him would strengthen the Treasury’s ability to identify and penalize illicit crypto transactions. Furthermore, this toll would necessitate technological advancements for tracking such funding. The Treasury also intends to broaden its jurisdiction to regulate crypto exchanges and related businesses. Without Congressional approval for additional powers, Adeyemo warned that the misuse of virtual assets by malicious actors is likely to increase.

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2024-04-09 10:03