-
The
U.S.
Department
of
the
Treasury
has
been
pushing
for
lawmakers
to
grant
it
extended
powers
to
battle
illicit
finance
using
crypto. -
One
of
the
government’s
requests
is
for
special
jurisdiction
over
non-U.S.
stablecoin
issuers,
such
as
Tether.
The
U.S.
Department
of
the
Treasury
is
pressing
lawmakers
for
a
new
set
of
powers
that
would
give
the
government
unprecedented
enforcement
and
sanctions
authority
over
the
crypto
sector,
including
the
ability
to
roam
well
beyond
American
borders
and
get
involved
with
transactions
that
don’t
involve
its
citizenry.
Deputy
Secretary
of
the
Treasury
Wally
Adeyemo
has
lobbied
senior
members
of
Congress
with
a
proposal
–
mapped
out
in
writing
–
that
he
called
“a
set
of
common-sense
recommendations
to
expand
our
authorities
and
broaden
our
tools
and
resources
to
go
after
illicit
actors
in
the
digital
asset
space,”
according
to
excerpts
from
a
speech
he’s
set
to
deliver
on
Wednesday
in
Washington.
“Modes
of
raising
and
moving
money
continue
to
evolve
and
many
of
our
authorities
have
not
been
updated
in
decades,”
according
to
the
Treasury
document
sent
to
lawmakers
and
obtained
by
CoinDesk.
Terrorist
groups
–
including
Hamas
–
“use
new
virtual
methods
to
move,
store
and
obfuscate
their
funding
streams.
These
methods
often
include
the
use
of
evasive
cryptocurrency
networks
and
services,
including
mixers.”
Congress
should
grant
the
Treasury
“a
new
secondary
sanctions
tool”
against
exchanges
that
support
terrorism,
according
to
the
proposal.
It
could
give
the
government
similar
powers
when
targeting
virtual
asset
providers
as
its
long
had
over
correspondent
banking
accounts
and
“would
account
for
the
technological
changes
that
have
rendered
highly
effective
tools
in
the
traditional
payments
context
less
effective
against
cryptocurrencies.”
Sanctions
tool
Adeyemo
said
it
“will
not
only
cut
off
a
firm
from
the
U.S.
financial
system,
but
will
also
expose
any
firm
that
continues
to
do
business
with
the
sanctioned
entity
to
being
cut
off
from
the
U.S.
financial
system.”
Lawmakers
should
also
beef
up
the
department’s
powers
under
the
Bank
Secrecy
Act
(BSA),
allowing
for
the
“targeting
of
cryptocurrency
entities
and
services
that
facilitate
funding
for
terrorists,”
the
proposal
said.
It
calls
for
a
new
category
of
financial
institutions
under
the
BSA
that
would
include
“cryptocurrency
exchanges,
Virtual
Asset
Service
Providers
(VASPs),
virtual
asset
wallet
providers,
certain
blockchain
validator
nodes
and
decentralized
finance
services,”
requiring
them
to
meet
certain
anti-money-laundering
demands.
As
the
crypto
industry
has
repeatedly
argued:
Many
of
these
entities,
such
as
wallet
providers
and
decentralized
finance
(DeFi)
entities
may
not
be
in
any
practical
position
to
meet
those
kinds
of
requirements,
and
a
law
could
effectively
snuff
them
out.
Austin
Campbell,
the
founder
of
Zero
Knowledge
Consulting,
noted
on
X
that
the
proposal
has
some
reasonable
points
but
is
also
asking
for
“the
broadest
expansions
of
powers
since
the
Patriot
Act,
and
in
a
way
that
makes
a
mockery
of
some
of
the
technical
details
of
modern
communication
with
the
side
benefit
of
probably
causing
major
geopolitical
conflict
due
to
the
overreach.”
Tether
The
government
is
also
apparently
looking
for
power
over
Tether,
the
issuer
of
the
biggest
stablecoin,
USDT,
and
its
ilk.
“Legislation
could
explicitly
authorize
OFAC
to
exercise
extraterritorial
jurisdiction
over
transactions
in
stablecoins
pegged
to
the
USD
(or
other
dollar-denominated
transactions)
as
they
generally
would
over
USD
transactions,”
the
proposal
suggested,
giving
a
reach
into
transactions
that
the
document
notes
“involve
no
U.S.
touchpoints.”
Adeyemo
doubled
down
on
that
idea
in
his
Wednesday
remarks,
saying
that
non-U.S.
stablecoin
issuers
shouldn’t
be
able
to
use
the
U.S.
dollar
without
“procedures
to
prevent
terrorists
from
abusing
their
platform.”
This
Treasury
campaign
cites
reports
on
the
crypto
funding
efforts
from
Hamas
–
made
especially
relevant
in
the
context
of
that
group’s
recent
attacks
on
Israel
–
but
the
brief
mention
doesn’t
note
that
aspects
of
those
reports
had
later
been
discredited
by
an
analysis
firm
that
was
originally
cited,
leaving
the
extent
of
Hamas’
crypto
involvement
uncertain.
Meanwhile,
the
Treasury
Department
is
fresh
off
of
an
earth-shaking
$4.3
billion
settlement
with
Binance,
which
among
fines
to
various
agencies
included
the
Treasury’s
largest-ever
corporate
penalty.
The
agreement
saddled
the
biggest
global
exchange
with
monitors
to
report
the
company’s
ongoing
behavior
to
U.S.
government
watchdogs.
And
also
on
Wednesday,
the
department
announced
its
latest
action
against
a
crypto
mixing
service,
Sinbad.
“As
terrorists
and
criminals
innovate
their
approach
to
illicit
finance,
we
need
tools
to
be
able
to
keep
up
with
them,”
Adeyemo
said.