United States Deputy Treasury Secretary Adewale Adeyemo continued advocating for more enforcement powers for his agency in testimony before the Senate Banking Committee on April 9. In a hearing on countering illicit finance, terrorism and sanctions evasion, Adeyemo outlined three proposed reforms to improve U.S. enforcement efforts against international bad actors using crypto.
Adeyemo was following up on proposals made by the Treasury Department in November. In his latest testimony, Adeyemo listed three changes the department was looking for. Those were to introduce secondary sanctions targeting “foreign digital asset providers” engage illicit finance.
U.S. sanctions prohibit institutions from using U.S. correspondent accounts and transaction processing through banks, Adeyemo said, but crypto exchanges and money services do not always depend on the use of correspondent accounts. “A new secondary sanctions tool” is needed:
“We can clarify that our authorities can reach extraterritorially when digital asset entities harm our national security while taking advantage of our financial system.”
Adeyemo did not elaborate on the form the new secondary sanctions might take.
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The second reform the Treasury is seeking would expand the powers of “existing authorities” to reach the digital asset ecosystem. Third, Adeyemo said, was “addresses jurisdictional risk from offshore cryptocurrency platforms.” He called the last point a “key challenge.” He noted:
“There is clear overlap between these proposals and the bills coming out of this Committee.”
Adeyemo was referring at least in part to committee member Elizabeth Warren and chair Sherrod Brown’s Digital Asset Anti-Money Laundering Act of 2022, which Warren reintroduced in the current congress. Both authors are prominent crypto skeptics.
Adeyemo pointed to the use of crypto by terrorist groups, North Korea and in the fentanyl trade as evidence of the Treasury’s need for greater enforcement powers. He conceded that “we continue to assess that terrorists prefer to use traditional financial products and services,” but cautioned, “we fear that without Congressional action to provide us with the necessary tools, the use of virtual assets by these actors will only grow.”
Banking Committee chair Sherrod Brown released a statement supporting the Treasury Department’s enforcement goals ahead of Adeyemo’s testimony. Ranking member Tim Scott praised the work the Treasury Department has done, but concentrated on foreign policy issues that he believes threaten U.S. security.
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