US Treasury Department warns digital currencies thwart sanctions efforts
The US Treasury Department argues that cryptocurrencies are delaying sanctions efforts and threatening national security, foreign policy, and economic interests.
The warning comes after a six-month Treasury Department review of the country’s sanctions program and policies.
The seven-page report details how international players are already reducing their exposure to the US financial system.
âUS adversaries – and some allies – are already reducing their use of the US dollar and their exposure to the US financial system more broadly in cross-border transactions.
We must be aware of the risk that these trends may erode the effectiveness of our sanctions. “
The Treasury says technological advancements such as cryptocurrencies serve as a vehicle to undermine traditional financial services and could undermine the effectiveness of U.S. sanctions.
âTechnological innovations such as digital currencies, alternative payment platforms, and new ways to hide cross-border transactions all potentially reduce the effectiveness of US sanctions.
We are aware of the risk that, if left unchecked, these digital assets and payment systems could undermine the effectiveness of our sanctions. “
The report suggests that the Treasury should try to better understand and use digital assets to help support sanctions efforts without stifling financial innovation.
“Specifically, [the] The Treasury should invest in deepening its institutional knowledge and capacity in the ever-changing digital assets and services space in order to support the full lifecycle of sanctions activities. “
The Treasury concludes by acknowledging that financial innovation and macroeconomic changes will force the United States to adjust its sanctions policy to deal with growing threats.
âThe United States faces a changing world where financial innovation, changes in global economic activity and new geopolitical challenges are redefining how economic power can be used to support national security objectives.
To deal effectively with these changes, the Treasury must modernize and adapt its sanctions policy and its operational framework. “
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