US Treasury highlights crypto as threat that could harm efficacy of sanctions

The United States Department of the Treasury recently published a review on sanctions for 2021 and stated that the government would need to ramp up efforts to develop its infrastructure and policies for cryptocurrencies. 

US government should implement new framework for crypto

The US Treasury Department said in a report that the increase in the adoption of digital assets was hampering the implementation of sanctions while balancing funds from humanitarian organizations. The document further suggested that effective communication is needed between itself and the crypto industry, financial institutions to improve the current policy.

The department added, “If left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”

The Treasury said that the government should adopt a structured policy framework to coordinate with allies and partners when needed to ensure that sanctions are understood, enforceable and adaptable. According to the report, measures must be implemented to “mitigate the unintended economic, political and humanitarian impact.”

Digital assets were highlighted as a risk in the report, and the Treasury suggested that it should invest in “deepening its institutional knowledge and capabilities” in the evolving cryptocurrency services space to “support the full sanctions lifecycle of activities.”

This move of stressing the need for the department to engage with the cryptocurrency community comes after a series of ransomware attacks earlier this year, notably the Colonial Pipeline system that was hacked in May. The Treasury imposed sanctions on a crypto over-the-counter (OTC) broker, Suex, last month for its alleged role in facilitating transactions for ransomware attacks.

The Office of Foreign Assets Control (OFAC) recently published guidelines for the cryptocurrency industry on navigating US sanctions. The office suggests that citizens in the country, including members that are involved in the digital asset industry, are responsible for ensuring that they do not engage in unauthorized activity or dealings with sanctioned persons or jurisdictions.