Wally Adeyemo, Deputy Secretary of the U.S. Treasury Department, has announced plans to explore new sanctions tools to target bad actors in the cryptocurrency space. In remarks at the Blockchain Association’s Policy Summit on November 29, Adeyemo highlighted the department's intention to seek expanded authority from Congress, enabling sanctions that could fully cut off entities from the U.S. financial system. The move aims to prevent groups like Hamas from finding refuge in the digital asset ecosystem. Adeyemo cited the recent settlement with Binance, alleging its involvement in facilitating illegal activities, including child sexual abuse, narcotics trafficking, and terrorism-related transactions. He emphasized the need for collaboration between the U.S. government and the financial sector to combat money laundering, fraud, and terrorism financing, hinting at potential scrutiny of stablecoin providers outside the U.S.


Deputy Secretary of the U.S. Treasury Department, Wally Adeyemo, has called for an expansion of sanctions tools to target illicit activities in the cryptocurrency space. In remarks at the Blockchain Association’s Policy Summit on November 29, Adeyemo outlined the department's intention to seek increased authority from Congress, allowing sanctions that could sever entities' ties to the U.S. financial system. This move is aimed at preventing groups like Hamas from taking refuge in the digital asset ecosystem. The announcement comes in the wake of the recent settlement with Binance, where the exchange was accused of facilitating illegal activities, including child sexual abuse, narcotics trafficking, and transactions linked to terrorism. Adeyemo stressed the importance of collaboration between the U.S. government and the financial sector to combat money laundering, fraud, and terrorism financing. Additionally, he hinted at potential scrutiny of stablecoin providers located outside the United States.


Deputy Secretary Adeyemo cited the Binance case as a prime example of the need for enhanced tools to address illicit activities in the crypto space. According to his remarks, Binance allowed itself to be used by perpetrators involved in child sexual abuse, illegal narcotics trafficking, and terrorism-related transactions spanning over 100,000 transactions. Notably, groups such as Hamas, Al Qaeda, and ISIS were allegedly involved in these transactions.


The U.S. Treasury Department is seeking authority from Congress to impose sanctions that could entirely cut off entities engaged in illicit activities from the U.S. financial system. The objective is to strengthen measures against actors seeking refuge within the digital asset ecosystem. Adeyemo stressed the importance of coordination between the government and financial sector entities, emphasizing the need for information sharing to combat financial crimes effectively.


In light of these developments, stablecoin providers based outside the United States may come under scrutiny as part of efforts to close regulatory gaps. Adeyemo highlighted the necessity of updating illicit finance authorities to address the challenges presented by the evolving digital asset ecosystem in 2023. He emphasized that relying on decades-old statutory definitions would not be sufficient to tackle the risks associated with illicit finance in the current landscape.


The announcement aligns with broader efforts by the U.S. Treasury to enhance regulatory measures in the cryptocurrency space. In August, the department released draft rules aimed at addressing challenges related to reporting and taxing crypto transactions. However, these proposals have faced criticism for their perceived impracticality, particularly concerning reporting requirements for brokers, set to take effect in 2026.


In a related development, the U.S. Treasury’s Office of Foreign Assets Control recently imposed sanctions on the cryptocurrency mixer Sinbad, alleging its involvement in facilitating money laundering for the North Korea-based Lazarus Group. Adeyemo's call for expanded sanctions tools reflects ongoing efforts to combat illicit activities and enhance regulatory oversight in the dynamic and evolving landscape of the cryptocurrency industry.


(TURNER WRIGHT, COINTELEGRAPH, 2023)