Treasury Deputy Secretary Advocates for Crypto Enforcement Powers

United States Deputy Treasury Secretary Adewale Adeyemo reiterated his call for enhanced enforcement powers for the Treasury Department in testimony before the Senate Banking Committee on April 9. 

Addressing the committee on countering illicit finance, terrorism, and sanctions evasion, Adeyemo outlined three proposed reforms aimed at bolstering U.S. enforcement efforts against international bad actors utilizing cryptocurrencies.

Treasury Department’s 3 Key Changes

Building upon proposals put forth by the Treasury Department in November, Adeyemo emphasized three key changes sought by the department. Firstly, he advocated for the introduction of secondary sanctions targeting “foreign digital asset providers” involved in illicit finance. 

While U.S. sanctions currently prohibit institutions from utilizing U.S. correspondent accounts and transaction processing through banks, Adeyemo highlighted that crypto exchanges and money services often operate independently of correspondent accounts. 

“We can clarify that our authorities can reach extraterritorially when digital asset entities harm our national security while taking advantage of our financial system,” he said.

Clarification of Treasury Department’s Authorities

He stressed the necessity for a new secondary sanctions tool to address this gap, asserting the need to clarify the Treasury Department’s authority to reach extraterritorially when digital asset entities harm national security while exploiting the U.S. financial system.

However, Adeyemo did not provide specifics on the form such secondary sanctions might take. Secondly, the Treasury is seeking to expand the powers of existing authorities to encompass the digital asset ecosystem. 

Lastly, Adeyemo underscored the importance of addressing jurisdictional risks posed by offshore cryptocurrency platforms, characterizing it as a “key challenge.”

Adeyemo hinted at potential legislative alignment, noting overlaps between the Treasury’s proposals and bills under consideration by the committee, including the Digital Asset Anti-Money Laundering Act of 2022, reintroduced by committee member Elizabeth Warren.

Granting Necessary Tools

Adeyemo emphasized the urgency of granting the Treasury the necessary tools, citing the use of cryptocurrencies by terrorist groups, North Korea, and the fentanyl trade as pressing concerns. 

While acknowledging that terrorists still predominantly favor traditional financial products and services, he warned of the escalating risk posed by virtual assets without Congressional action.

Chair of the Banking Committee, Sherrod Brown, expressed support for the Treasury Department’s enforcement objectives ahead of Adeyemo’s testimony, while Ranking Member Tim Scott emphasized foreign policy issues threatening U.S. security in his remarks. 

The call for enhanced enforcement powers reflects ongoing efforts to address illicit activities facilitated by cryptocurrencies and their impact on national security.