May 25, 2024
U.S. Treasury Official Unveils Plans for Strengthening Crypto Crime Oversight
Policy & Regulation

U.S. Treasury Official Unveils Plans for Strengthening Crypto Crime Oversight

In a testimony before the Senate Banking Committee on April 9, United States Deputy Treasury Secretary Adewale Adeyemo continued his push for increased enforcement powers for his agency, particularly in the realm of crypto regulation.

Addressing the committee on countering illicit finance, terrorism, and sanctions evasion, Adeyemo outlined three proposed reforms aimed at enhancing U.S. enforcement efforts against international bad actors leveraging crypto.

Proposals Follow November Suggestions

Building upon proposals set forth by the Treasury Department in November, Adeyemo emphasized the need for three key reforms during his latest testimony.

These reforms are aimed at introducing secondary sanctions targeting “foreign digital asset providers” engaged in illicit finance.

Highlighting the inadequacies of current sanctions frameworks, Adeyemo stressed the necessity of a new secondary sanctions tool to address instances where digital asset entities harm national security while exploiting the financial system.

He underscored the need to ensure that U.S. authorities possess extraterritorial reach in cases involving illicit activities facilitated by cryptocurrency.

Expansion of Existing Authorities

The second reform sought by the Treasury Department aims to expand the powers of existing authorities to encompass the digital asset ecosystem, thereby enabling more robust enforcement actions against illicit actors operating within the crypto space.

Adeyemo identified the mitigation of jurisdictional risks posed by offshore cryptocurrency platforms as a pivotal challenge.

He emphasized the urgent need to address this issue to prevent the exploitation of regulatory loopholes by malicious actors seeking to evade sanctions and engage in illicit financial activities.

Congressional Support and Legislative Alignment

Adeyemo acknowledged the overlap between the Treasury Department’s proposals and legislative efforts emerging from the Senate Banking Committee.

Particularly referencing the Digital Asset Anti-Money Laundering Act of 2022 introduced by committee members Elizabeth Warren and Sherrod Brown. Both lawmakers are known for their cautious stance on cryptocurrency.

Highlighting the growing use of cryptocurrency by terrorist groups, in North Korea, and illicit activities such as the fentanyl trade, Adeyemo underscored the urgent need for greater enforcement powers to counter these threats effectively.

Source: Eleanor Terrell

While acknowledging that terrorists predominantly rely on traditional financial products and services, he warned of the potential expansion of virtual asset usage without congressional intervention.

Committee Response

Chair Sherrod Brown voiced support for the Treasury Department’s enforcement objectives, echoing the urgency in addressing security challenges posed by cryptocurrency misuse.

Ranking member Tim Scott commended the Treasury Department’s efforts while emphasizing the importance of addressing foreign policy issues that threaten U.S. security alongside enforcement measures.

As discussions surrounding crypto regulation continue to evolve, Adeyemo’s testimony underscores the ongoing efforts to strengthen regulatory frameworks and enhance enforcement capabilities in the face of emerging challenges in the digital asset landscape.

Image: Wikimedia Commons

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