US Treasury Deputy Secretary Wally Adeyemo has urged Congress to provide regulatory tools to combat illicit finance associated with cryptocurrencies.
During a hearing before the Senate Banking, Housing and Urban Affairs Committee, Adeyemo raised concerns about the increasing use of virtual currencies and digital assets by terrorist groups and state actors like Russia and North Korea to conceal their identities and transfer resources.
While noting some successes in detecting illicit finance activities, Adeyemo stressed the necessity of expanding enforcement efforts to thwart such actions by “malign actors.”
He warned that without congressional intervention, the adoption of virtual assets by these groups would continue to escalate. Adeyemo cited instances such as North Korea resorting to sophisticated cyber heists for illicit revenue laundering, and Russia utilizing alternative payment methods like the stablecoin tether to evade sanctions and fund conflicts.
To tackle these challenges, Adeyemo urged Congress to enact legislation strengthening tools to target foreign digital asset providers enabling illicit finance, including the imposition of secondary sanctions. He also emphasized the importance of closing regulatory loopholes and extending authorities to cover entities like virtual asset wallet providers and cryptocurrency exchanges that emerged after existing laws were enacted. Addressing jurisdictional risks posed by offshore cryptocurrency platforms was highlighted as crucial for safeguarding US national security.
Prominent cryptocurrency firms Coinbase Global and Circle Internet Financial echoed Adeyemo’s call, urging Senate Majority Leader Chuck Schumer and House Speaker Mitch McConnell to enact stablecoin regulations and enhance the overall digital asset market structure. They highlighted the risks of regulatory arbitrage due to the lack of clarity and urged the extension of anti-money laundering and sanctions regulations to cover foreign stablecoin issuers referencing the US dollar.
Adeyemo confirmed the Treasury’s previous recommendations to the committee and expressed the department’s readiness to collaborate with lawmakers to address these issues.
In a related development, a recent United Nations report emphasized the role of Tether in cyber fraud and money laundering activities in Southeast Asia. The report highlighted the rapid growth of sophisticated money laundering teams using Tether for underground transactions, particularly in online gambling platforms operating illegally. Tether refuted these claims, citing its collaboration with law enforcement agencies and asserting its token’s traceability, surpassing traditional banking systems’ monitoring capabilities.
