Regulation
The US Treasury will focus more on combating illicit financial activities via cryptocurrencies, emerging technologies
The U.S. Department of the Treasury intends to place significant emphasis on managing the risks posed by cryptocurrencies and other emerging technologies in the coming months through comprehensive regulation.
Treasury has made digital assets a key area of focus in its 2024 plan National strategy for the fight against terrorism and other illicit financing relationship.
The strategy outlined a comprehensive approach to mitigate the misuse of these technologies by illicit actors, while promoting a transparent and secure financial system.
Filling regulatory gaps
The Treasury report highlighted the evolving threat environmentwith criminal organizations increasingly exploiting cryptocurrencies and other digital assets to facilitate illegal activities such as money laundering, terrorist financing and cybercrime.
Strategy 2024 aims to close regulatory gaps, strengthen law enforcement actions and strengthen international cooperation to effectively combat these threats. Treasury intends to implement comprehensive regulations for digital assets and virtual asset service providers (VASPs).
Additionally, Treasury will propose rules to mandate anti-money laundering and countering the financing of terrorism (AML/CFT) programs for investment advisors and greater transparency in unfunded real estate transactions. It will also monitor and adapt rules for emerging technologies such as DeFi to prevent criminals from exploiting them.
The report also states that improving the operational effectiveness of law enforcement and other government agencies remains crucial. The strategy includes initiatives to provide robust training, leverage advanced technologies such as artificial intelligence and blockchain analytics, and promote public-private partnerships to share vital information on illicit activities.
Treasury has highlighted the importance of international collaboration to counter illicit finance, working with global partners to strengthen AML/CFT standards and share intelligence to dismantle cross-border criminal networks.
Responsible technological advancement
Treasury will also prioritize supporting responsible technological advances. The strategy supported the development of secure digital identity solutions and promoted innovation in AML/CFT compliance technologies in the private sector.
Treasury aims to finalize these regulations and continue address vulnerabilities in sectors currently not subject to global AML/CFT measures.
The report highlighted the critical need to remain vigilant and responsive to new threats. The ongoing modernization of the AML/CFT regime has ensured that both the public and private sectors can effectively address the most significant illicit financial risks.
Despite significant progress, Treasury has recognized the ongoing challenges in combating illicit activity. He added that the growing sophistication of illicit actors, particularly in the virtual asset sector, requires continued adaptation and innovation in regulatory and enforcement frameworks.
Treasury has called for additional resources and legislative support to strengthen its efforts to supervise and enforce compliance among non-bank financial institutions and new market entrants.
Strategy 2024 reaffirmed the U.S. government’s commitment to maintaining a safe and transparent financial system. By addressing the risks associated with digital assets and promoting international collaboration, Treasury aims to create a resilient environment that deters illicit activity and supports legitimate financial innovation.