US Treasury Claims Crypto is a Threat to National Security
- The US Treasury Department claims that the lack of transparency in DeFi transactions is a threat to national security.
- US regulators have called for increased scrutiny of the crypto industry.
- Some crypto users fear that crypto projects might leave the US in search of more-friendly regions.
Crypto users in the United States have more reasons to worry about the future of the crypto industry following a recent statement by the U.S. Treasury Department, which claimed that the decentralized crypto market was a threat to national security and needed more supervision.
The Treasury Department released a new report on Thursday, April 6, where it assessed the risks posed by the DeFi space. The report will most likely serve as the foundation for intense regulation in the United States.
The DeFi market has been one of the most innovative and lucrative sectors of the crypto world. It eliminates the need for centralized bodies, such as banks, during transactions and enables users to transact directly. However, US regulators are concerned with the lack of oversight of DeFi transactions.
The Treasury Department report stated that ransomware hackers, hostile administrations, and other national security risks have taken advantage of the market’s lack of transparency to move money around the globe undetected, supporting the financial backing that is crucial to their activities.
Brian Nelson, Treasury’s undersecretary for terrorism and financial intelligence, noted that “illicit actors, including criminals, scammers, and North Korean cyber actors, are using DeFi services in the process of laundering illicit funds. Capturing the potential benefits associated with DeFi services requires addressing these risks.”
The report outlines the Treasury Department’s ambitions to bring the market under broader federal regulation and warns that platforms that don’t put in place adequate verification procedures run the danger of facing enforcement action.
The Treasury undersecretary recommended that the private sector use the department’s findings to guide their own risk mitigation plans. According to Mr. Nelson, businesses must take decisive action in accordance with legislation to combat money laundering, financing of terrorism, and sanctions evasion.
The Treasury Department recommended, among other things, that the federal government strengthen its current market oversight and enforcement by forcing platforms to follow the same anti-money-laundering laws that banks and other financial institutions are required to observe. It added that federal agencies must collaborate with other governments to create international standards as well as broaden their regulatory authority to fill any potential supervision holes in the markets.
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