us treasury department

Digital Currencies Impede US Treasury Sanction Efforts, Report says

A new report issued by the United States Treasury Department revealed that digital currencies are posing a critical impediment to its sanctions policies, a trend it is determined to put an end to.

Cryptocurrencies as a Tool to Bypass U.S. Sanctions

Per the 9-page report, the Treasury Department highlighted digital currencies as one of the primary technological innovations that make its sanctions efforts ineffective.

“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. These technologies offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system,”

The report also reads, adding that these cryptocurrencies “also empower our adversaries seeking to build new financial and payments systems intended to diminish the dollar’s global role. We are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of our sanctions.”

The U.S. Dollar, as the reserve currency, is considered as part of global integration. The United States has long utilized financial sanctions to weaken state actors and non-state actors, such as political entities, that seem to threaten the country’s national security. Amongst the countries under related sanctions is Afghanistan, in which the U.S. froze billions of dollars since the Taliban took over the country’s regime.

Many sanctioned countries, including North Korea and Venezuela, are already exploring alternatives through digital currencies, a move that has proven to be of grave concern to the U.S. Treasury Department.

Cryptocurrencies: Tool for Financial Freedom

One of the primary goals of digital currencies like Bitcoin (BTC), Ethereum (ETH), and Tether (USDT) is to serve as a tool for financial freedom for everyone. Cryptocurrency transactions occur in a peer-2-peer manner and cannot be blocked by any financial regulator as they appear on the blockchain, which is not under the control of one entity.

While the U.S. perceives digital currencies as a flawed tool that it hopes to learn more from to mete out its sanctions, adopters of the technologies consider crypto as one of the most innovative discoveries in the 21st Century, with all thanks to Satoshi Nakamoto.

US Treasury Department Imposes Sanctions on Russian Crypto Mining Firm Bitriver

The United States announced that it has added Bitriver, a Russian cryptocurrency mining firm, to its sanctions list.

The latest movement is part of the US ongoing efforts to block Russian companies from accessing the global financial network amid Russia’s invasion of Ukraine.

The Treasury Department’s Office of Foreign Asset Control (OFAC), the agency which handles the U.S. sanctions list, announced on Wednesday that it has put sanctions on Bitriver and 10 of its Russia-based subsidiaries by blocking them from accessing the global financial market. OFAC accused Bitriver and the subsidiaries of providing technical support to Russia in its war against Ukraine.

OFAC also said that it has put sanctions on Transkapitalbank, a Russian commercial bank. Transkapitalbank is known for serving several banks in Asia, including in China, and the Middle East, and has suggested options to evade international sanctions.

The Treasury further mentioned that it has targeted a global network of over 40 people and companies led by US-designated Russian oligarch Konstantin Malofeyev, including firms “whose primary mission is to facilitate sanctions evasion for Russian entities.”

In a statement, Brian Nelson, the Treasury’s under-secretary for terrorism and financial intelligence, talked about the development and said: “Treasury can and will target those who evade, attempt to evade, or aid the evasion of US sanctions against Russia, as they are helping support Putin’s brutal war of choice.”

“The United States will work to ensure that the sanctions we have imposed, in close coordination with our international partners, degrade the Kremlin’s ability to project power and fund its invasion,” Nelson elaborated further.

Mounting International Pressure

The US has imposed several series of sanctions on Russia since its February 24 invasion of Ukraine, including the nation’s largest financial institutions like Alfa Bank and Sberbank, major state-owned enterprises, as well as Russian government officials and their family members, including Putin himself.

The latest sanction on Bitriver and other Russian entities follow an announcement made early this month by the Biden administration about its plans to impose additional sanctions targeting Russian financial institutions, including Kremlin officials and their family members.

The fresh sanctions packages are being made through collaboration with European Union allies and the Group of 7 (G7) nations.

All Russian flights have been banned from Canadian, EU, US, and UK airspace. The UK, EU, and the U.S. have sanctioned over 1,000 Russian individuals and businesses in total, including wealthy business leaders – the so-called oligarchs – who are regarded as close to the Kremlin.

The sweeping measures follow mounting global pressure on Russia amid its invasion of Ukraine.

US Treasury Invites Public Opinions on Digital Assets Framework

The US Department of the Treasury invited public opinions on Tuesday on the potential risks and benefits of cryptocurrencies based on President Joe Biden’s executive order in March.

The Treasury stated that it is asking for input from the public that will help the administration in reporting to President Jow Biden on the possible impacts of digital assets on the payment infrastructures and financial markets.

Nellie Liang, Under Secretary of the Treasury for Domestic Finance, commented about the development: “For consumers, digital assets may present potential benefits, such as faster payments, as well as potential risks, including risks related to frauds and scams. The Treasury Department is seeking to benefit from the American people’s and market participants’ expertise by soliciting public comment as we engage in this important work.”

The request for public comment was launched on the Federal Register last Friday, July 8, but the Treasury formally announced it on Tuesday, July 12.

The Treasury expects the public to submit their comments by August 8th. The comments are just what people think or view could be the impact of mass adoption of cryptocurrencies, both for retail and institutional investors, and the potential effect of introducing new digital asset products and services. The agency also asked US citizens to weigh their thoughts on potential risks, such as losing private keys, and the authenticity of digital assets, including NFTs, among others.

The Treasury also noted concern that digital assets can pose risks to the underserved and vulnerable communities if exposed to such financial products with proper awareness: “The rise in use of digital assets, and differences across communities, may also present a disparate financial risk to less informed market participants or exacerbate inequities. It is critical to ensure that digital assets do not pose undue risks to consumers, investors, or businesses, and to put in place protections as a part of efforts to expand access to safe and affordable financial services experienced by more vulnerable populations.”

As reported by Blockchain.News, in March, U.S. President Joe Biden signed an executive order calling the federal government to examine the benefits and risks of cryptocurrencies.

Biden’s executive order directed the Treasury Department to take the lead among other government agencies in developing regulations and oversight aimed at addressing both systemic and consumer risks around digital assets.