US Treasury Department Assistant Secretary Adewale Adeyemo said Russia is increasingly using alternative payment mechanisms, such as Tether’s USDT stablecoin, to evade economic sanctions, according to his written testimony on April 9. the Senate Committee on Banking, Housing and Urban Affairs.
This comment follows increasing reports that malicious actors were using Tether’s stablecoin for their illegal activities. Notably, the US and UK governments have launched a joint investigation into crypto transactions worth more than $20 billion that may have violated Russian sanctions related to the stablecoin.
Despite these issues, Tether has maintained its commitment to compliance standards and continued cooperation with law enforcement agencies to combat illegal financial activity.
Meanwhile, Coinbase Chief Legal Officer Paul Grewal claimed that stablecoin legislation would help the US government tackle this problem. He said:
“US security interests are served by centering dollar-denominated stablecoins in the home of the dollar. Rules for managing reserves, redemption rights and things like that are not difficult to tackle if we have the will to do more than politics.”
Terrorist financing
Adeyemo’s testimony further indicated that terrorist organizations such as Al Qaeda and the Palestinian Islamic Jihad (PIJ) were taking advantage of “innovations in crypto” to circumvent the traditional financial system.
He said:
“Our problem is that actors are increasingly finding ways to hide their identities and move resources using virtual currencies. The more effective our targeting has been, the more reason there is for these terrorist groups to explore virtual assets.”
Therefore, Adeyemo said the US must “build an enforcement regime that can prevent this [illegal] activity as more terrorists, transnational criminals and rogue states turn to digital assets.”
Reforms
Adeyemo further disclosed that the Ministry of Finance has submitted proposals to the committee to strengthen the government’s capabilities in countering terrorist financing.
These proposals include three key reforms, including the implementation of a secondary sanctions instrument, modernizing and strengthening existing authorities, and mitigating jurisdictional risks arising from offshore digital asset platforms.
Adeyemo emphasized that these reforms are crucial to clarify how U.S. “authorities can reach extraterritorially when digital assets harm our national security while simultaneously benefiting our financial system.”
Furthermore, the reforms will create a level playing field for US-based Virtual Asset Service Providers (VASPs).
He concluded:
“The United States has a strong interest in ensuring that our tools and authorities are available and ready to mitigate risks in this rapidly evolving ecosystem, especially for dollar-based digital assets.”
The post that the US Treasury is officially targeting Tether USDT stablecoin to evade Russian sanctions first appeared on CryptoSlate.