The U.S. Treasury Department said in a report that cryptocurrencies could undermine the effectiveness of U.S. sanctions. The report followed a six-month review of U.S. sanctions against countries with whom it is at odds or suspects of being behind the illegal activity. It noted that “digital currencies, alternative payment platforms, and new ways of hiding cross-border transactions all potentially reduce the efficacy of American sanctions.”
Cryptocurrencies could diminish the dollar’s global role.
“These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system,” the Treasury Department’s report said, and could be used by adversaries “to build new financial and payments systems intended to diminish the dollar’s global role.” According to a New York Times story, the United States of America has put over 9,000 sanctions in place against countries that it alleges are behind terrorism and illegal actions or committed human rights violations, of which North Korea and Iran. Several countries under U.S sanctions have reportedly used cryptocurrencies to trade with other countries.
The report recommends agency to enhance its “institutional knowledge” of cryptocurrencies.
The report recommended the agency itself enhance its “institutional knowledge” of cryptocurrencies and their use. It also recommended that the agency itself improve its communications with industry organizations, financial institutions, and others that touch the crypto space. “The United States faces a changing world where financial innovation, shifts in global economic activity, and new geopolitical challenges are redefining how economic power can be used to support national security objectives,” the report mentioned. “These shifts are accompanied by new and rising threats for which sanctions may be a critical tool of U.S. policy. To effectively confront these changes, Treasury must modernize and adapt its sanctions policy and operational framework,” the Treasury Department concluded.
