The United States Treasury is actively pursuing an expansion of its authority to prevent illicit cryptocurrency funding and to oversee cryptocurrency exchanges.
U.S. cryptocurrency exchanges may soon be subject to further regulation from the Treasury Department. The most recent Bloomberg article states that the US Treasury Department has requested more penalties on cryptocurrency service providers based outside of the US. In order to safeguard the nation’s security, it is pursuing this.
During the Senate hearing on Tuesday, April 9, Adewale O. Adeyemo, the deputy secretary of the Treasury, said in written testimony:
“The issue we’re facing is the fact that individuals are becoming better and better at concealing their identities and transferring assets via virtual funds.”
He went on to say that terrorists and other bad actors “search new methods to transfer their resources in light of the efforts we are taking to keep them from accessing the conventional banking system.”
Additionally, the US Treasury highlighted that the Quds Force of Iran has been providing cryptocurrency funds to the violent organisations in Gaza, including Hamas and the Palestinian Islamic Jihad. The Treasury has already taken measures against these networks and others that help Hamas get smaller funds.
Adeyemo went on to say that North Korea and Russia are two more state players who have been heavily investing in cryptocurrency. In an effort to evade US sanctions, these two nations have been heavily using stablecoins.
A group of senators from both the Democratic and Republican parties in the United States submitted a measure in December 2023 to expand the authority of the Treasury to penalize additional terrorist organizations, including Hamas. The Treasury has proposed measures to strengthen the counter-terrorist finance agencies, according to Adeyemo.
In his testimony, Adeyemo called for three main changes: the creation of a secondary sanctions tool; the improvement and fixing of flaws in the current regulatory bodies; and the lowering of the legal risks connected to offshore cryptocurrency platforms.
Currently, international institutions engaged in questionable activity might have their US accounts and transaction processing blocked by the US Treasury. “However, unlike banks, some money service companies and international cryptocurrency exchanges do not rely on correspondent accounts for every one of their transactions,” Adeyemo said.
He went on to say that the Treasury’s targeting powers will be improved with a secondary sanctions toll. Additionally, it would improve the necessary technology modifications for tracking down illegal cryptocurrency financing. Additionally, the Treasury is looking to broaden its jurisdiction to include cryptocurrency exchanges and other crypto businesses. “We are concerned that unless Congress takes steps to equip us, these individuals will continue to use virtual assets,” Adeyemo said.
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