In his testimony before the Senate Banking Committee on April 9, United States Deputy Treasury Secretary Adewale Adeyemo continued to advocate for increased enforcement powers for his agency. The focus of the hearing was on countering illicit finance, terrorism, and sanctions evasion, and Adeyemo presented three proposed reforms to enhance U.S. enforcement efforts against international wrongdoers using cryptocurrency.
Adeyemo was following up on proposals previously made by the Treasury Department in November. During his latest testimony, he outlined three changes that the department was seeking. The first was the introduction of secondary sanctions that target “foreign digital asset providers” involved in illicit finance. Adeyemo emphasized that while U.S. sanctions prohibit institutions from using U.S. correspondent accounts and transaction processing through banks, cryptocurrency exchanges and money services often do not rely on these accounts. Therefore, a new secondary sanctions tool is needed, although Adeyemo did not provide further details on its form.
The second reform sought by the Treasury is an expansion of the powers of existing authorities to regulate the digital asset ecosystem. The third reform addresses the jurisdictional risk posed by offshore cryptocurrency platforms. Adeyemo referred to this as a “key challenge.” His reference likely included committee member Elizabeth Warren and chair Sherrod Brown’s Digital Asset Anti-Money Laundering Act of 2022, which Warren reintroduced in the current congress. Both Warren and Brown are well-known skeptics of cryptocurrency.
Adeyemo provided examples of how terrorist groups, North Korea, and the fentanyl trade have utilized cryptocurrency, emphasizing the Treasury’s need for greater enforcement powers. While acknowledging that terrorists still prefer traditional financial products and services, he expressed concern that without the necessary tools provided by Congress, the use of virtual assets by these actors will continue to grow.
Sherrod Brown, the chair of the Banking Committee, released a statement in support of the Treasury Department’s enforcement goals prior to Adeyemo’s testimony. Ranking member Tim Scott praised the work done by the Treasury Department but focused on foreign policy issues that he believes pose a threat to U.S. security.