Faced with the proliferation of cases of malicious use of crypto, the US Treasury is toughening its tone. Specifically, it seeks additional legal tools to combat actors threatening national security and circumventing sanctions through digital assets. A plea motivated by recent revelations about the use of crypto by groups like Hamas and the Palestinian Islamic Jihad.
The call for new sanctions powers!
In written testimony ahead of a Senate hearing, Assistant Secretary Adewale Adeyemo highlighted the challenges posed by “malicious actors” leveraging crypto to conceal their identities and transfer resources. Therefore, he called for the granting of a new “secondary sanctions” tool to allow the Treasury to better target virtual currencies.
According to Adeyemo, this new skill would allow the Treasury to “evolve in its targeting capabilities” and take into account “technological changes” making traditional tools less effective against crypto. In other words, the Treasury aims to have more control over players linked to virtual currency ecosystems.
Multiple crypto threats at the heart of concerns
The Treasury's call follows multiple cases of malicious use recently revealed. These include the financing of Palestinian terrorist groups like Hamas and Islamic Jihad by the Iranian Al-Quds Force via crypto. But also the increasing use of these assets by North Korea and Russia to circumvent economic sanctions.
Additionally, transactions worth more than $20 billion through sanctioned Russian exchange Garantex have recently attracted the attention of U.S. authorities. Although the technical details remain unclear, the Treasury is clearly seeking to better control illicit flows transiting through stock exchanges crypto abroad.
The successive revelations have convinced the US Treasury to act more firmly against abuses involving crypto. If the new sanctions powers are granted, regulators will have additional leverage to crack down on malicious use while preserving legitimate uses.
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