US Treasury official outlines proposals for stricter crypto crime control

US Deputy Treasury Secretary Adewale Adeyemo continued to recommend more enforcement powers for his agency in testimony before the Senate Banking Committee on April 9. During the hearing on money laundering, terrorism and sanctions prevention, Adeyemo outlined three proposed reforms to improve US enforcement efforts. against international bad actors using crypto.

Adeyemo was monitoring the proposals presented by the Treasury Department in November. In his recent testimony, Adeyemo listed three changes the department wants. Those “foreign digital asset providers” should introduce secondary sanctions targeting illicit financing.

U.S. sanctions prevent institutions from using U.S. correspondent accounts and processing transactions through banks, Adeyemo said, but cryptocurrencies and financial services do not always depend on the use of correspondent accounts. A “new secondary restraint device” is required:

We can make it clear that our authorities have extraterritorial reach when digital assets are exploiting our financial system and harming our national security.

Adeyemo did not elaborate on the form the new secondary sanction would take.

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The second amendment the Treasury is seeking would expand the powers of “incumbent authorities” to access the digital asset ecosystem. The third, according to Adeyemo, is “addressing the legal threat of 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 chairwoman of the 2022 Sherrod Brown Digital Assets Anti-Money Laundering Act, which Warren reintroduced in the current Congress. Both authors are prominent crypto skeptics.

Adeyemo pointed to the use of crypto as evidence of the need for the Treasury's greater enforcement powers against terrorist groups, North Korea and the fentanyl trade. “We continue to assess that terrorists prefer to use traditional financial products and services,” but warned, “We fear that Congressional action will only allow these actors to use virtual assets if we do not provide them with the necessary tools.”

Banking Committee Chairman Sherrod Brown issued a statement in support of the Treasury Department's enforcement goals ahead of Adeyemo's testimony. Ranking Member Tim Scott praised the work done by the Treasury Department, but focused on foreign policy issues that he says threaten America's security.

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