Illicit actors are getting better at using crypto, Treasury tells Congress 

Treasury needs additional secondary sanctions tools that can specifically target digital asset providers, deputy Treasury Secretary Wally Adeyemo pleaded Tuesday

share

Illicit actors are only going to become savvier in their use of cryptocurrency to fund illegal activities, deputy Treasury Secretary Wally Adeyemo warned Senators in a plea for additional support from Congress. 

“We should know that [illicit actors] are going to increasingly look to use cryptocurrencies and virtual assets to move things given our lack of ability to stop them, given the lack of tools,” Adeyemo said Tuesday during a Senate Banking Committee hearing. 

Treasury needs additional secondary sanctions tools, ones that can specifically target digital asset providers, Adeyemo said. Congress must also pass legislation to expand the agency’s reach to “explicitly cover the key players and core activities of the digital asset ecosystem” and laws addressing the jurisdictional challenges that come with regulating foreign crypto companies, he urged.  

Read more: Chainalysis calls for nuance when assessing crypto’s role in terror financing

The hearing, titled “Countering Illicit Finance, Terrorism and Sanctions Evasion,” is the second the committee has held on the subject in the past six months. 

“It’s not just Hamas and terrorists that are using crypto financing,” Sen. Elizabeth Warren, D-Mass., said Tuesday. “North Korea ransomware gangs, drug traffickers, distributors of child sexual abuse materials, name your bad guy, and crypto is a way that they can move money around.” 

Read more: ‘No evidence’ Hamas raised millions in crypto, Elliptic says

Some Republican committee members disagreed, arguing that Democrats, under the Biden administration, are wrongly putting all the focus on crypto in discussions on curbing illicit financial activities. 

“For us to have a conversation that sounds like a digital asset conversation, as opposed to a conversation about illicit financing, that is far larger than digital assets to me [and] makes it into a scapegoat,” said Sen. Tim Scott, R-S.C. 

Bipartisan bills addressing sanctions evasion and cryptocurrencies started hitting the floor in 2022 as concerns around blocked Russian actors turning to digital assets as a loophole mounted. 

Sens. Warren, and Roger Marshall, R-Kan. reintroduced the Digital Asset Anti-Money Laundering Act of 2023 last summer. The legislation seeks to bring “crypto participants” — defined in the bill as wallet providers, miners and validators — under compliance requirements

The Crypto Asset National Security Enhancement Act of 2023, introduced in the Senate in July, is a similar effort which also enjoys bipartisan support, sponsored by Sens. Jack Reed, D-R.I., Mark Warner, D-Va., Mike Rounds, R-S.D., and Mitt Romney, R-Utah. 

Neither bill has advanced out of committee markup.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

recent research

Blinks Report Image.png

Research

Blinks enable the ability to vampire attack user monetization of existing networks by inserting onchain and financialized functionalities directly within the popular social feeds and digital experiences of today.

article-image

Plus, how the FTX collapse played out in Asian countries

article-image

Kalshi founder Tarek Mansour said Thursday marked the “the first trade on regulated election markets in nearly a century”

article-image

I was excited about being on the precipice of realigning societal incentives and solving many issues plaguing our modern financial world

article-image

Cypherpunk Holdings has rebranded to Sol Strategies in a pivot to a Solana-first investment approach

article-image

BitGo’s wrapped bitcoin (wBTC) has a new custodial challenger

article-image

Make no mistake: Tether makes a ton of money. But exactly how much depends a lot on the price of bitcoin.