US Treasury Proposes Regulations to Address Crypto Crimes
Deputy Treasury Secretary Adewale Adeyemo recently issued a statement on the matter of illegal activities taking place in the crypto sector. Adeyemo informed the Senate Banking Committee that terrorists prefer cash transactions but the department has been harboring concerns about crypto’s demand and expansion.
On this account, the government official testified in front of the Senate Banking Committee on 9th April 2024.
During the hearing, the official briefed committee members on the matter of illegal financial aid, terrorism, and incidents of sanctioned evasions. As per Adeyemo, there are three possible solutions or reform proposals to improve the enforcement efforts of the nation against international bad actors using cryptocurrencies as aid. Adeyemo furthered a proposal that was made by the Treasury Department in November 2024.
The government official stated that the first possible solution to the problem is the introduction of secondary sanctions directed at foreign digital asset providers. As part of anti-terrorist sanctions, institutional investors cannot use correspondent accounts and transaction process options via banking enterprises.
Adeyemo noted that crypto trading platforms and monetary service providers cannot rely on use of correspondent accounts therefore implementation of a secondary sanction tool is necessary.
Misuse of Cryptocurrencies Against National Interest
Deputy Secretary Adeyemo stated that US authorities have the ability and means to approach foreign digital asset projects that harm national interest while benefiting from our financial system.
He refrained from providing further explanation about the details of the proposed secondary sanctions. The second solution he proposed is granting an extension of power for the existing authorities to contain the digital asset ecosystem.
The final solution he presented was to address the jurisdictional risks stemming from foreign crypto trading platforms. He noticed that this point was a key challenge. The official further stated that there are clear overlaps between these proposals and bills that the Committee has published.
As per the report, he was referring to the Anti-Money Laundering Act of 2022 presented by Senator Elizabeth Warren and head Sherrod Brown.
It is important to note that both authors are prominent crypt skeptics. Adeyemo pointed that the use of cryptocurrencies by terrorist groups based in North Korea to facilitate the underground fentanyl trade. The official presented these statistics as the reason to greater enforcement action.
He noticed that terrorists usually prefer to go for traditional financial products and services. However, he suggested that without Congressional intervention the accessibility and approach to virtual assets by these threat actors is only going to grow.
Banking Committee Chairperson Discusses the Risks Associated with Crypto Usage
Sherrod Brown, the banking committee chairperson, also issued a joint statement with the Treasury Department reinforcing the enforcement goals of Adeyemo. At the same time, Tim Scott the ranking member of the Treasury Department issued praise for the work that the Treasury Department has contributed.
However, the official directed the attention of the Treasury on foreign policy issues that can serve as a potential threat to the US security.
Another Cointelegraph report noticed that Canada has started to implement the international taxation reporting standard. As per the article, Canada aims to have OECD standard in place for crypto investors before 2027 as part of its agreement with 46 other nations.
New Crypto Tax Requirements
The government published a supplement with the official 2024 annual budget report. This budget expects the government to implement the International Crypto-Asset Reporting Framework (CARF) for tax purposes by 2026.
The country is taking an early start to establish the new standard that is observed by 47 nations before 2027. The CARF will impose a new reporting requirement on all Crypto Asset Services Providers (CASPs) such as crypto exchanges, crypto-asset brokerages, crypto dealers, and crypto ATM operators.
These new taxation requirements will be applicable to both individuals and businesses. The supplement report classified stablecoin derivatives and NFTs as cryptocurrencies.
All qualifying products as per CARF will report to the Canada Revenue Agency (CRA) between cryptocurrencies and fiat currencies. Crypto asset transfers are conducted by CASPs inclusive of payment processing when the value exceeds $50K USD that requires reporting. CASPs require obtaining and reporting information on each customer with details such as name, address, date of birth, residential details, and taxpayer IDs.
