Deputy Treasury Secretary Advocates for Expanded Crypto Oversight Powers
Summary:
US Deputy Treasury Secretary, Adewale Adeyemo, pushes for increased enforcement powers for the Treasury, focusing on combating illicit finance and sanctions evasion. Adeyemo proposes three key reforms, which include implementing secondary sanctions for 'foreign digital asset providers', extending the reach of existing authorities to tackle the digital asset ecosystem and managing risks from offshore cryptocurrency platforms. The need for ramped up enforcement, Adeyemo argues, lies in the growing use of crypto in illicit activities. Concluding remarks from Banking Committee Chair, Sherrod Brown, showed support for the Treasury's objectives.
In his appearance before the Senate Banking Committee on April 9, Adewale Adeyemo, United States Deputy Secretary of the Treasury, continued his push for augmented enforcement powers for his department. The session focused on tackling the issues of illicit finance, sanctions evasion, and terrorism, during which Adeyemo detailed three proposed reforms aimed at enhancing U.S. capabilities to confront international miscreants exploiting crypto.
Adeyemo's recent testimony builds upon suggestions initially brought forth by the Treasury Department in November. The deputy secretary outlined three key changes that the department is seeking. Firstly, implementing secondary sanctions aimed at "foreign digital asset providers" involved in nefarious finance. Adeyemo noted that U.S sanctions inhibit institutions from utilizing U.S. correspondent accounts and bank-based transaction processing. However, cryptocurrency exchanges and monetary services don't always rely on correspondent accounts, thus a "new secondary sanctions tool" is required. This tool would enable US authorities to intervene extraterritorially if digital asset organizations negatively impact national security by exploiting the financial system. Adeyemo did not provide further details on the possible form these secondary sanctions might assume.
Amongst other things, the Treasury is aiming to amplify the powers of "existing authorities" to encompass the digital asset ecosystem - the second reform requested by the department. The third proposed reform, as described by Adeyemo, pertains to the risk posed by offshore cryptocurrency platforms. In his words, this signifies a "key challenge."
The proposed reforms intersect substantially with upcoming bills from the committee. This includes the Digital Asset Anti-Money Laundering Act of 2022 by committee member Elizabeth Warren and chair Sherrod Brown that was reintroduced this Congress.
As indications of the necessity for augmented Treasury enforcement powers, Adeyemo cited the utilization of crypto by terrorist groups, North Korea, and in the fentanyl trade. Although he admitted that traditional financial products and services remain the preferred option for terrorists, he warned that without intervention from Congress for added enforcement tools, these rogue actors' application of digital assets is likely to grow. Sherrod Brown, Chair of the Banking Committee, aired his support of the Treasury Department's enforcement objectives ahead of Adeyemo's testimony. Meanwhile, ranking member Tim Scott commended the efforts of the Treasury Department, while concentrating more on the external policy issues perceived as potential threats to U.S. security.
Published At
4/10/2024 12:15:17 AM
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