US Treasury Proposes Tools for Targeting Crypto Exchanges

The U.S. Treasury is taking steps to enhance its authority in addressing the misuse of cryptocurrencies by countries such as Iran, Russia, and North Korea. Deputy Secretary Adewale Adeyemo recently shed light on this pressing issue. He revealed efforts to combat the concealment of identities and the movement of resources through virtual currencies by malicious entities.

Adeyemo discussed the innovative methods terrorist groups and others adopt to funnel their resources. This comes as traditional financial avenues become increasingly inaccessible due to stringent restrictions. Specifically, he noted Iran’s Quds Force’s use of digital currencies to support militant organizations, including Hamas and the Palestinian Islamic Jihad in Gaza. This tactic is not isolated to Iran. North Korea and Russia also exploit cryptocurrencies to sidestep international sanctions.

The focus of the U.S. Treasury’s concerns includes foreign cryptocurrency exchanges that could threaten national security. These platforms, by engaging with the U.S. financial system, become potential targets for U.S. sanctions.

A particular case under investigation involves Garantex, a crypto exchange previously sanctioned by Russia. This platform processed transactions worth over $20 billion, primarily through the Tether (USDT) stablecoin. The U.S. is probing these transactions for possible sanction violations. The specifics of how the Treasury plans to expand its sanctions capabilities, particularly against Garantex’s partners, remain under discussion.