The U.S. Treasury Department is seeking more powers to combat growing cryptocurrency abuse in countries including Iran, Russia and North Korea.
According to Bloomberg, Deputy Secretary of State Adewale Adeyemo emphasized in written testimony ahead of the Senate hearing that the government is facing challenges posed by malicious actors who are "increasingly seeking ways to hide their identities and use virtual currencies to transfer resources."
Adeyemo noted that terrorist groups and other actors are looking for "new ways to move resources" in response to efforts to limit their access to traditional financial systems. He pointed out that over the past year, Iran's Quds Force (a branch of the Iranian military) has used cryptocurrencies to fund radical terrorist groups such as Hamas and the Palestinian Islamic Jihad in Gaza. In addition, he mentioned that other national actors, including North Korea and Russia, are also turning to cryptocurrencies to circumvent sanctions.
“The new secondary sanctions tool will help the Treasury improve its targeting capabilities and take into account changes in technology that are making efficient tools in the traditional payments environment less effective against virtual currencies,” Adeyemo said.
Although the specifics of the secondary sanctions tool remain unclear, it is understood that the U.S. Treasury Department aims to target overseas cryptocurrency exchanges that may pose a threat to national security while exploiting the U.S. financial system.
As previously reported by CoinDesk, U.S. authorities are investigating more than $20 billion in transactions conducted through Garantex, a cryptocurrency exchange subject to Russian sanctions. These transactions were conducted using the Tether (USDT) stablecoin and have come under scrutiny due to concerns about potential violations of Russian sanctions. However, it is unclear whether the U.S. Treasury intends to seek additional sanctions authority against Garantex's counterparties.