U.S. Treasury Department seeks to expand enforcement tools, sanction powers, targeting "USD stablecoin issuers"
The U.S. Department of the Treasury has proposed to Congress to expand enforcement tools and resources to enhance digital asset regulation. The Deputy Secretary of the Treasury also mentioned the need to restrict the issuers of foreign-based stablecoins, which inevitably brings Tether to mind.
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U.S. Treasury Department Calls for Expanded Enforcement, Sanction Powers
Deputy Secretary of the Treasury, Wally Adeyemo, has presented a written proposal to Congress aimed at expanding enforcement tools and resources to further track down wrongdoers in the digital assets space.
CoinDesk obtained the proposal document, outlining three main demands.
1. Establishment of New Regulatory Body under Bank Secrecy Act for Sanction Tools
Wally Adeyemo proposes the establishment of a new category of financial institutions under the Bank Secrecy Act (BSA) to regulate exchanges, VASPs, crypto wallet service providers, node validators, and DeFi to comply with anti-money laundering requirements.
Wally Adeyemo stated:
Many of our enforcement tools have not been updated for decades, and terror groups like Hamas have found new ways to move, store, and obscure financial flows, such as through the use of privacy coin networks, mixers, etc. Congress should grant the Treasury new secondary sanction tools, just as the government has long had authority over bank accounts.
2. Updating Regulations, Targeting Stablecoins
The proposal suggests legislation to clearly authorize the Office of Foreign Assets Control (OFAC) to have jurisdiction over transactions involving U.S. dollar stablecoins outside the U.S.
Wally Adeyemo further emphasized the importance of his proposal at the 2023 Blockchain Association Policy Summit:
We cannot rely on decades-old regulations to address the illicit financial risks we face today. We cannot allow U.S. dollar stablecoin providers operating outside the U.S. to have the privilege of using our currency without preventing abuse by terrorists.
He also referenced the Binance incident, stressing that offshore financial service providers should not be allowed to circumvent U.S. laws through different jurisdictions.
3. Collaboration with Regulatory Authorities
In the final point, Wally Adeyemo emphasized that in addition to working with Congress, there will also be active collaboration with the Financial Action Task Force (FATF) to ensure alignment in updating regulatory policies among allied countries.
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