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Cryptocurrencies may reduce US sanctions effectiveness, says US government report

A report released by the Biden administration this week warns that digital assets such as cryptocurrencies pose a risk to the US sanctions program.

Cryptocurrencies may reduce US sanctions effectiveness, says US government report

Cryptocurrencies may reduce US sanctions effectiveness, says US government report

“Technological innovations such as digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions,” according to the US Treasury Department report.

“These technologies offer malign actors opportunities to hold and transfer funds outside the collar-based financial system. They also empower our adversaries seeking to build new financial and payment systems intended to diminish the dollar’s global role,” it added.

So far, the United States has imposed more than 9,000 sanctions.

Sanctions have long served as a pillar of US policies abroad, targeting states like North Korea and Iran because of their roles in human rights abuses, terrorism or other illegal activities.

With regard to digital assets, the report makes two main recommendations.

First, the administration wants to ensure that sanctions are easily understood, enforceable and adaptable.

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  • “[The] treasury can build on existing outreach and engagement capabilities through enhanced communication with industry, financial institutions, allies, civil society, and the media, as well as the new constituencies, particularly the digital assets space,” explained the report.

    Second, the document calls for investments to be made in modernizing the Treasury’s sanctions regime.

    “In particular, Treasury should invest in deepening its institutional knowledge and capabilities in the evolving digital assets and services space to support the full sanctions lifecycle of activities,” the report added.

    The Treasury report also reiterates the Biden administration’s repeated warnings about the role of digital assets, such as cryptocurrencies, in illicit financial activities.

    With informations: Decrypt

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