The U.S. Treasury Department plans to place a significant emphasis on addressing the risks of cryptocurrencies and other emerging technologies through comprehensive regulation in the coming months.
The Ministry of Finance has made digital assets a key area of focus in its 2024 National Strategy for Combating Terrorist and Other Illicit Financing reports.
The strategy outlined a comprehensive approach to combat the misuse of these technologies by illicit actors while promoting a transparent and secure financial system.
Closing regulatory gaps
The Treasury report highlights the changing threat environment, with criminal organizations increasingly using cryptocurrencies and other digital assets to facilitate illicit activities such as money laundering, terrorist financing and cybercrime.
The 2024 Strategy aims to close regulatory gaps, strengthen enforcement actions and strengthen international cooperation to effectively combat these threats. The Ministry of Finance plans to implement comprehensive regulations for digital assets and virtual asset service providers (VASPs).
In addition, the Treasury Department will propose rules to mandate anti-money laundering and anti-terrorist financing (AML/CFT) programs for investment advisers and to increase transparency in unfinanced real estate transactions. It will also monitor and adjust 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 critical. The strategy includes initiatives to provide robust training, leverage cutting-edge technologies such as AI and blockchain analytics, and promote public-private partnerships to share vital information on illegal activities.
The Ministry of Finance emphasized the importance of international cooperation to tackle illicit financing, working with global partners to strengthen AML/CFT standards and share intelligence to disrupt cross-border criminal networks.
Responsible technological progress
The Ministry of Finance will also prioritize supporting responsible technological progress. The strategy advocated the development of secure digital identity solutions and promoted innovation in AML/CFT compliance technologies within the private sector.
The Treasury Department is committed to finalizing these regulations and continuing to address vulnerabilities in sectors not currently subject to comprehensive AML/CFT measures.
The report emphasized the critical need to remain vigilant and respond to emerging threats. The ongoing modernization of the AML/CFT regime ensured that both the public and private sectors could effectively address key illicit financing risks.
Despite significant progress, the Ministry of Finance acknowledged that challenges remain in combating illegal activities. It added that the increasing sophistication of illicit actors, especially in the area of virtual assets, requires continued adaptation and innovation in regulatory and enforcement frameworks.
The Treasury Department called for additional resources and legislative support to strengthen its efforts in monitoring and enforcing compliance of non-bank financial institutions and new market entrants.
The 2024 Strategy 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 cooperation, the Treasury Department aims to create a resilient environment that deters illicit activities and supports legitimate financial innovation.