U.S. Treasury Seeks Expanded Authority Over Cryptocurrency Providers

The U.S. Treasury is seeking to expand its authority to enhance supervision of cryptocurrency service providers, both domestic and foreign. Deputy Secretary of State Adewale O. Adeyemo, speaking before a Senate hearing, highlighted the continuous efforts of malicious actors to conceal identities and transfer assets through digital means.

Adeyemo specifically mentioned the use of cryptocurrencies by terrorist organizations and countries like Russia and North Korea to evade U.S. sanctions. He emphasized the need for more stringent measures to combat the growing use of virtual assets by these entities.

In response, the U.S. Treasury is urging lawmakers to approve additional sanctions targeting foreign digital asset providers that facilitate illicit transactions. Adeyemo expressed concerns that without proper tools and regulations, the use of cryptocurrencies by terrorist groups and state actors will only increase.

Recent reports from the U.S. Treasury indicate minimal use of cryptocurrencies in funding Hamas activities. However, there is a growing interest from criminals in utilizing digital assets for illicit purposes. Authorities worldwide are taking steps to address this issue, with a focus on prosecuting foreign-based crypto platforms that pose a threat to U.S. national security.

In a related development, the Wall Street Journal reported that Palestinian militants received significant funding in digital assets, leading American legislators to call for action against industry players like Binance and Tether. Chainalysis experts have noted that some reports on terrorist-linked cryptocurrencies may include inaccuracies in tracking third-party funds.

Elliptic, an analytics company, has also raised concerns about the exaggerated scale of terrorist financing in cryptocurrencies. The accuracy of data regarding Hamas’ cryptocurrency holdings has been questioned, emphasizing the need for more precise information in such reports.

Senator Warren has accused crypto lobbyists of hindering anti-terrorism efforts, highlighting the challenges faced by regulatory authorities in combating illicit activities in the digital asset space.