The US Treasury Department plans to prioritize addressing the risks associated with cryptocurrencies and other emerging technologies through extensive regulatory measures in the coming months.

In its 2024 National Strategy for Combating Terrorist and Other Illicit Financing report, the Treasury has designated digital assets as a critical area of focus. The strategy aims to combat the misuse of these technologies by illicit actors while promoting transparency and security in the financial system.

The report underscores the evolving threat landscape, noting the increasing use of cryptocurrencies and digital assets by criminal organizations for activities such as money laundering, terrorist financing, and cybercrime. To address these challenges, the 2024 Strategy aims to close regulatory gaps, strengthen enforcement actions, and enhance international cooperation.

Specifically, the Treasury intends to introduce comprehensive regulations for digital assets and virtual asset service providers (VASPs). It will propose rules mandating anti-money laundering and countering the financing of terrorism (AML/CFT) programs for investment advisers and increase transparency in non-financed real estate transactions. Additionally, the Treasury will monitor and adjust regulations concerning emerging technologies like DeFi to prevent misuse by criminals.

The strategy emphasizes improving the operational capabilities of law enforcement and government agencies through enhanced training and the adoption of advanced technologies such as AI and blockchain analytics. Public-private partnerships will also be fostered to facilitate the sharing of crucial information on illicit activities.

International collaboration is highlighted as crucial in combating illicit finance, with the Treasury committed to working closely with global partners to strengthen AML/CFT standards and intelligence sharing to disrupt transnational criminal networks.

Moreover, the Treasury aims to support responsible technological advancements, advocating for secure digital identity solutions and encouraging innovation in AML/CFT compliance technologies within the private sector. It aims to finalize these regulations and address vulnerabilities in sectors currently lacking comprehensive AML/CFT measures.

The report underscores the need for vigilance and responsiveness to emerging threats, acknowledging the ongoing challenges posed by sophisticated illicit actors in the virtual asset realm. It calls for additional resources and legislative support to enhance supervision and compliance enforcement among non-bank financial institutions and new market participants.

Overall, the 2024 Strategy reaffirms the US government’s commitment to maintaining a secure and transparent financial system. By tackling the risks associated with digital assets and fostering global cooperation, the Treasury aims to create a resilient environment that deters illicit activities while supporting legitimate financial innovation.