US Deputy Treasury Secretary Adewale Adeyemo is proposing reforms to improve enforcement against cryptocurrencies, including secondary sanctions, extraterritorial jurisdiction and a new secondary sanctions tool.
US Deputy Treasury Secretary Adewale Adeyemo outlined three potential changes at a recent hearing to strengthen law enforcement against foreign criminals who use cryptocurrency. The aim of these measures is to better prepare the authorities to deal with financial crimes in the field of cryptocurrencies and to deal with the growing use of digital assets for illicit financing.
The first option proposed by Adeyemo is to implement secondary sanctions that specifically target overseas digital asset providers that engage in illicit financing. The US Treasury Department hopes to prevent these providers from facilitating illegal activity and sever their connection to the international banking system by imposing secondary sanctions. By increasing the accountability of digital asset platforms and service providers, this policy will make it harder for dishonest people to use cryptocurrencies for illegal activities.
Extending Jurisdiction of Authority to Extend Extraterritorially
Adeyemo proposed a second change, in which he called for authorities to expand beyond national borders in cases where companies using digital assets to undermine national security abuse the financial system. This increase would allow US law enforcement officials to pursue and punish foreign criminals who use cryptocurrencies for illegal activities, even if they are not based in the US. This reform seeks to ensure that businesses and individuals involved in illicit financing cannot avoid liability by taking advantage of the global nature of digital assets by reducing jurisdictional gaps.
Introduction of a new instrument for secondary sanctions
Adeyemo’s third proposal is the introduction of a new secondary sanctions mechanism. While the specifics of this tool are unknown, it is expected to provide additional ways to target and deter overseas digital asset providers involved in illicit financing. By using cryptocurrencies, this technology will enhance the Treasury Department’s capacity to sabotage the financial networks of foreign criminal organizations and complement current sanctions regimes.
Growing concern about the use of cryptocurrencies by criminal entities, such as terrorist organizations, drug traffickers, and state-sponsored organizations, prompted these proposed amendments. Adeyemo stressed the need for Congress to provide more assistance to enact laws that specifically address the main actors and core functions of the digital asset ecosystem, as well as jurisdictional issues related to the control of international cryptocurrency businesses.
The US government hopes to preserve the integrity of the global financial system, strengthen its law enforcement capacity, and improve international cooperation in the fight against financial crimes using cryptocurrencies by implementing these measures.
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