On 29th November 2023, Deputy Secretary Wally Adeyemo addressed an audience of insiders in Washington D.C. He emphasized that one should have the capacity to build new tools to prevent money laundering and provide protection to the individuals who are fighting against it. In the event, he spoke against illegal use of cryptocurrencies abroad. He also stated that stablecoin providers outside the US should be more responsible for preventing terrorists from accessing the network of crypto financing through platforms.
The US government alleges that many crypto companies are unable to block and report illicit crypto transactions. Some companies such as Binance broke anti-money laundering and failed to report more than 100,000 suspicious transactions. In such situations, Deputy Secretary Adeyemo warned that the American government may cut off cryptocurrency companies from the broader American economy. This move may succeed in depriving criminals and terrorists of illegally using crypto finance.
The US Treasury Department is one of the most powerful government institutions in the US. It has a lot of influential power such as imposing economic sanctions and framing policies to comply with US laws. The department also has the Financial Crimes Enforcement Network (FinCEN) and Office of Foreign Assets Control (OFAC) under its control. However, since the illicit activities involving crypto financing often happen abroad, the department wants to expand its power to regulate the industry. Therefore, Adyemo sent a proposal to the Banking Committee to vastly increase the reach of the department.
A week back, the US Treasury Department collaborated with the Commodity Futures Trading Commission and Justice Department to take stringent measures against Binance. The company was found guilty on charges of violating the Bank Secrecy Act. Then, it had to pay the largest settlement amount of $4.3 billion. The department also decided to sanction Lazarus, a crypto mixer linked to North Korea. These steps are a clear indication that it is very concerned about the national security implications of misusing crypto finance.
Crypto finance is one of the best methods of financing valuable and useful projects. However, some criminal and terrorist organizations such as Hamas have used cryptos to finance its terror activities. The October 7 attack on Israeli civilians was financed through cryptos. Therefore, many officials in the US rightfully worry about the potential misuse of crypto financing because it threatens national security. American lawmakers such as Senator Elizabeth Warren want legislation that will allow federal authorities to take appropriate measures to prevent such misuse. The legislative proposal will be similar to the anti-money laundering provisions that are applicable in the case of banks. Traditional Wall Street institutions and asset managers also are covered under the same provision.
The US Treasury Department is very concerned about the misuse of crypto finance. The reason is that it poses a huge threat to national security. Therefore, the speech of Wally Adeyemo is very relevant since his proposals can indeed stamp out security threats in the crypto space. The proposed legislation can expand the powers of the Treasury Department to prevent risks involving cryptos.