The US Treasury Department has published a new report detailing the role of digital currencies in its sanction efforts globally. Per the report, the Treasury Department said tech innovations such as cryptocurrencies have made its sanctions ineffective, as many are now able to bypass the financial constraints placed on them through these new asset classes.
Cryptocurrencies offer a P2P model of sending money from one party to another without the involvement of centralized financial institutions as we have in the traditional payment industry. Without government oversight, many have taken to these new asset classes as an opportunity for monetary freedom, with obvious accompanying benefits that the US Treasury Department sees as an impediment in the global influence of the Dollar.
Per TheCoinRise’s earlier report, heavily sanctioned countries like North Korea are effectively utilizing cryptocurrencies to bypass US sanctions.
“Technological innovations such as digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions,” the report reads, “These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system. They also empower our adversaries seeking to build new financial and payments systems intended to diminish the dollar’s global role.”
With these risks laid out, the regulator notes that it is “mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”
US Treasury Department’s Plans to Fight Digital Currency Interference
The use of digital currencies like Bitcoin for transactions is gradually becoming a mainstream affair. From El Salvador legalizing Bitcoin as a legal tender in the nation to reduce the cost of its remittance inflows, to the adoption of various digital currencies by mainstream e-commerce marketplaces, the use of crypto is now more integrated than is anticipated.
As reported by TheCoinRise, besides North Korea, Russia is also arguably planning to adopt digital currencies in bypassing economic sanctions the US is meting out through the dominance of the US dollar.
However, in order to respond to the threat to its sanctions around the world, the Treasury Department said it will “invest in deepening its institutional knowledge and capabilities in the evolving digital assets and services space to support the full sanctions lifecycle of activities.” With cryptocurrencies typically still growing rapidly, the US Treasury Department may face increased challenges, than it envisaged, in stemming their impact on its sanctions pursuit.