Treasury Asks Congress for More Authorities to Go After Illicit Actors in Digital Asset Space

Treasury Asks Congress for More Authorities to Go After Illicit Actors in Digital Asset Space – The Deputy Secretary of the Treasury, Wally Adeyemo, highlighted the Treasury Department’s request to Congress for enhanced tools and authorities to combat illicit activities in the digital asset realm. 

Emphasizing the need to align illicit finance measures with the contemporary challenges posed by the evolving digital asset ecosystem, Adeyemo outlined these priorities at the Blockchain Association’s Policy Summit. “We are calling on Congress to create a secondary sanction regime that will not only cut off a firm from the U.S. financial system but will also expose any firm that continues to do business with the sanctioned entity to being cut off from the U.S. financial system,” he revealed. 

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“This is a significant tool we do not request lightly. But we need to do everything in our power to make sure that groups like Hamas are not able to find safe haven within the digital asset ecosystem.” The deputy secretary of the Treasury added: “Yesterday, Treasury provided Congress a set of common-sense recommendations to expand our authorities and broaden our tools and resources to go after illicit actors in the digital asset space.”

He noted that this week, the Treasury sanctioned Sinbad.io (Sinbad), a crypto mixer that “serves as a key money-laundering tool for a cyber hacking group sponsored by North Korea,” claiming that Sinbad processed millions of dollars’ worth of cryptocurrency “from cyber hacks and enabled cybercriminals to mask illicit transactions.” Adeyemo cautioned that “illicit actors have always taken advantage of new technology.” 

Emphasizing that “risk tends to migrate to places where global regulation and enforcement are less well developed.” He further detailed: “First, we are pursuing the creation of new sanctions tools targeted towards actors in the digital asset ecosystem that allow terrorist groups and other illicit actors to move their assets.”

Secondly, he declared: “We need to update our illicit finance authorities to match the challenges we face today, including those presented by the evolving digital asset ecosystem.” He continued: “A digital asset ecosystem that lacks a shared commitment to preventing illicit finance provides ample opportunity for groups, like North Korea and Hamas to move resources in ways that are intended to undermine our efforts to stop them.” 

He added that in order to address these challenges, a shared commitment is needed, meaning “the digital asset industry and the government working hand in hand to cut off illicit actors before they are able to spread roots and for us to create a culture of accountability.” The Treasury official emphasize the importance of the crypto industry proactively taking steps to prevent cryptocurrencies from being used by transnational criminal organizations, terrorists, and rogue states.

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He stated: “I hoped the digital asset industry would take up this call to partner with government, design new tools, and pursue new ways to protect digital assets from being abused.” He also addressed stablecoins, stating: “We cannot allow dollar-backed stablecoin providers outside the United States to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform.”

“We cannot permit offshore financial services providers to use jurisdiction-evasion tactics to avoid complying with our laws.” Adeyemo affirmed that, in addition to collaborating with Congress, the Treasury is dedicated to partnering with the Financial Action Task Force (FATF) to ensure that international allies and partners align with the U.S. in revising their regulatory strategies.

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