U.S. Regulators Warn Crypto Firms Over Lack of Anti-Illicit Finance Measures


The United States has warned that some digital asset companies are not doing enough to prevent illicit finances, a subject that has come under scrutiny after the recent attacks by Palestinian militant group Hamas. Deputy Treasury Secretary Wally Adeyemo said at an event in London that the majority of financial institutions are committed to rooting out terrorist financing, but that those in the digital asset space “wish to innovate without regards to its consequences”.

Adeyemo then declared that if these firms do not take steps to prevent illicit financial flows, the U.S. and its partners will. He is currently on a tour of London and Brussels as part of the U.S. government’s efforts to clamp down on Hamas, which have included sanctions against those involved in its investment portfolio and a Gaza-based cryptocurrency exchange.

Cryptocurrency wallet addresses are pseudonymous, meaning users can send and receive crypto without revealing their identity. However, the U.S. Treasury has stated that groups such as Hamas can be identified when they attempt to convert cryptocurrencies into traditional currencies. This is a major part of their work, which also includes persuading crypto firms to help tackle the problem.

Adeyemo concluded that although crypto does not make up the majority of funding for terrorist groups, the U.S. is taking action now to prevent its use in the future. The Treasury Department’s Financial Crimes Enforcement Network (FinCEN) recently proposed increasing transparency around cryptocurrency ‘mixers’, to combat the use of the tool by malicious actors.

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