U.S. Treasury Department warns of negative effects from cryptocurrencies

U.S. Treasury Department warns of negative effects from cryptocurrencies

Alternative digital currencies and payment platforms give US sanctioned parties the ability to hold and transfer funds outside of the underlying financial system USD traditionally.

The U.S. Treasury Department said Oct. 18 that the growing popularity of cryptocurrencies could undermine the effectiveness of the country’s economic and financial sanctions, and possibly even diminish the role of cryptocurrencies USD.

A report on the US sanctions system released by the Treasury Department on Monday said that while economic and financial sanctions remain a necessary and effective policy tool, the tool also faces a number of challenges.

According to the report above, these challenges include increased risks from new payment systems, the increasing use of digital assets and increased cybercrime.

The U.S. Treasury Department’s sanctions work by preventing targeted individuals – including individuals, government officials, or corporations – from using the U.S. financial system.

This makes it impossible for these audiences in most locations around the world to connect with banking or benefit from trading.

According to the report, sanctions have increased tenfold over the past two decades, with 9,421 cases imposed this year, compared to just 912 in 2000.

However, the report states that digital currencies and alternative payment platforms offer sanctioned parties the ability to hold and transfer funds outside of the financial system based on USD traditionally.

This factor motivates them to find new ways to hide cross-border transactions and build new financial and payment systems that take on the global role of USD.

Deputy Treasury Secretary Wally Adeyemo Adeyemo is expected to testify before the Senate Banking Committee on October 19 (local time).

According to the preparatory text released by his office on Monday evening, Adeyemo is expected to say the incumbent U.S. administration must, in coordination and cooperation with allies, apply sanctions to capitalize on the greater impact of the countries’ joint action.

Additionally, the U.S. Treasury Department needs to update its sanctions mechanism, technology, and people to adapt to the growing threats posed by cybercrime, ransomware, and other risks.

H.Thuy

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