More Crypto Sanctions Likely, Treasury Official Says

The Treasury Department expects to issue more crypto-related sanctions and allocate more resources to better target the digital assets of cybercriminals, Treasury Deputy Secretary Wally Adeyemo said. Speaking during a Center for a New American Security Event event last week, Adeyemo also said the agency is placing a high priority on multilateral designations and is hoping to better understand trading partners’ concerns about U.S. secondary sanctions.

Adeyemo’s comments came the same week Treasury released the public results of its monthslong sanctions review, which outlines an approach to better coordinate designations with trading partners and establish more modern sanctions regimes (see 2110190044). That effort will help the agency better tackle illegal uses of cryptocurrency and crypto-related payments, Adeyemo said, such as the U.S.’s first designation of a crypto exchange in September for facilitating ransomware payments (see 2109210031).

“The simple answer is yes,” Adeyemo said after being asked whether more crypto-related sanctions are likely. “If there are crypto exchanges” that are “fundamentally in the business of furthering cybercriminals, we will use all the tools within our toolkit to go after those entities.”

The agency plans to add staffers who “better understand these emerging technologies,” Adeyemo said. Officials will look to “extend our regulatory approaches to address the issues” that those new staffers raise. “Ultimately, the growth of digital assets is a challenge that we have to address when it comes to our sanctions regimes,” Adeyemo said. “We need to be more thoughtful and better understand how these digital assets will impact our ability to use sanctions as a tool of national security.”

Adeyemo also echoed some comments he made to the Senate Banking Committee last week, saying the agency will emphasize multilateral sanctions over unilateral moves. During the sanctions review, he said the U.S. spoke with G-7 allies in part to better coordinate future sanctions, but also to understand their concerns with U.S. secondary sanctions. Those extraterritorial measures have particularly caused issues in the European Union, which uses a blocking statute to outlaw participation with certain U.S. sanctions (see 2108020030).

“A number of our allies and partners have concerns with the unilateral use of our sanctions,” Adeyemo said. “And the truth is that better understanding those concerns on the front end as we're thinking through our shared objectives will help us in tailoring our sanctions going forward.”

Adeyemo also said the agency “learned a lot” from aid groups about issues surrounding humanitarian exceptions in sanctions regimes and has already made some improvements. He specifically pointed to the creation of the Ethiopian sanctions regime in September, which included three new general licenses authorizing certain aid and humanitarian-related transactions (see 2109170036).

“Instead of waiting to put out general licenses after we put out the executive order, we put up general licenses at the same time,” Adeyemo said. “We wanted to ensure that humanitarian assistance groups knew that we did not want humanitarian aid to stop for vulnerable populations in that region.”