US Treasury Department says cryptocurrencies could could undermine sanctions

The agency issued the warning after a six-month review of U.S. sanction programs and recommended that the agency itself improve communication with financial institutions and others that touch the crypto space.

The U.S. Treasury Department said on Monday in a report that cryptocurrencies could undermine the effectiveness of U.S. sanctions.

• The report, which followed a six-month review of U.S. sanctions against countries with whom it is at odds or suspects of being behind illegal activity, noted that “digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions.”

• “These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system,” the report said, and could be used by adversaries “to to build new financial and payments systems intended to diminish the dollar’s global role.”

• The U.S. has put over 9,000 sanctions in place against countries that it alleges are behind terrorism and illegal actions or committed human rights violations, including North Korea and Iran, according to a New York Times story.

• The report recommended that the agency itself enhance its “institutional knowledge” of cryptocurrencies and their use.

• It also recommended that the agency itself improve its communications with industry organizations, financial institutions and others that touch the crypto space.