The US Treasury said that cryptocurrencies can dent the role of the USD as a reserve currency while incentivizing other people in hiding cross-border transactions.
The US Treasury seems to be worried enough regarding the rising use of cryptocurrencies. Earlier this week on Monday, October 18, the Treasury Department published a report noting how cryptocurrencies can undermine the effect of US sanctions.
As a result, crypto would further dent the role of the American Dollar in the international market. The report comes as the Treasury Department was reviewing the US sanctions system. The Treasury noted that “while sanctions remain an essential and effective policy tool, they also face new challenges including rising risks from new payments systems, the growing use of digital assets, and cybercriminals”.
The US sanctions prevent governments, businesses, or individuals from gaining access to the US financial systems. This further cuts them off from banking or trading with other top economies in the world. But the report notes that cryptocurrencies and other alternative payment platforms “offer malign actors opportunities to hold and transfer funds outside the traditional dollar-based financial system”.
In addition to the impact on sanctions, the Treasury also noted that cryptocurrencies incentivize people of hiding cross-border transactions. Besides, the help in building new financial payments systems that intend to diminish the dollar’s global role.
Modernizing the Sanctions System
The recent report from the Treasury Department showed that the sanctions have increased tenfold over the last two decades. The Treasury also noted that sanctions need to have a clear objective. Besides, they should avoid any unintended economic and humanitarian harm and impose in coordination with other US allies.
Deputy Treasury Secretary Wally Adeyemo said that they are modernizing the sanctions tool. Adeyemo added:
“Sanctions are a fundamentally important tool to advance our national security interests. Treasury’s sanctions review has shown that this powerful instrument continues to deliver results but also faces new challenges. We’re committed to working with partners and allies to modernize and strengthen this critical tool.”
The report further noted that they “are mindful of the risk that, if left unchecked, these digital assets and payments systems could harm the efficacy of their sanctions”.
During his recent tour in South Africa, Cardano-cofounder Charles Hoskinson also lashed out at the US Treasury. He said that the US Treasury is doing all it can to shut down crypto assets. Hoskinson noted:
“In DC, the Treasury Department does everything in its power to try to kill our industry. A $2 trillion industry just pops up in our backyard, and my government’s trying to kill it”.
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