Treasury Report Reveals Crypto Misuse Surge, Urges Action

Kelvin Munene Murithi
February 8, 2024
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CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.
U.S. Treasury Dept. Adds Blender To Sanction List

Highlights

  • Treasury flags spike in cryptocurrency misuse for money laundering & illicit activities.
  • VASPs and DeFi platforms struggle with compliance, facilitating financial crime.
  • Gaming anonymity fosters money laundering, adding complexity to financial oversight.

The U.S. Treasury Department has brought to light an emerging issue within the financial domain, revealing a spike in cryptocurrency misuse by criminal actors. In its 2024 National Risk Assessments, the department goes into detail on urgent matters of money laundering, terrorist financing, and proliferation financing, which is a very complex picture that needs to be addressed urgently.

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A Surge in Crypto Misuse

The results, however, bring to light an obvious shift among criminals and scammers toward virtual assets. This change highlights a more general phenomenon of digital finance exploitation, with virtual currencies becoming increasingly used as channels for money laundering associated with various illegal activities such as fraud, drug trafficking, human smuggling, and corruption.

The Treasury’s report highlights the increasing anxiety about cryptocurrencies, a stark contrast to traditional laundering techniques that involved cash-based operations associated with drug trafficking proceeds.

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Regulatory Challenges and the DeFi Conundrum

The report also emphasizes the issues presented by VASPs and DeFi platforms. Despite the regulatory frameworks intended to regulate the illicit flow of funds, compliance remains challenging; some VASPs either avoid U.S. regulations or fail to register appropriately.

The DeFi sector, in turn, poses specific challenges because several services that fall under the definition of financial institutions provided by the Bank Secrecy Act do not fulfill their AML and CFT obligations. This negligence allows illicit actors to abuse these platforms, making the regulatory landscape even more complex.

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Online Gaming and Terrorist Financing

The Treasury’s assessment also includes the emerging online gaming industry that, although fast-growing and innovative, introduces new routes for money laundering. The online gaming environment, characterized by a lot of anonymity and enormous scale, makes it the ideal ground for money laundering activities to thrive thus another complex dimension that has added weight on digital finance regulation.

Additionally, the report unveils that terrorist networks not only continue to use such traditional financial channels but also turn their attention to virtual assets as a way of money transfer. Significantly, the demand for stablecoins is increasing among these groups, so they are taking a tactical move towards more stable digital currencies.

In light of these results, the U.S. Treasury Department is preparing to issue a strategic plan to address vulnerabilities and risks identified in 2024 assessments. This upcoming plan is anticipated to provide detailed recommendations to indicate the proactive approach toward preventing digital finance abuse. However, the department’s actions symbolize a wider pledge to protect the integrity of the U.S. financial system while dealing with digitalization age complications.

Read Also: Ethereum’s Holesky Testnet Triumph with Dencun Upgrade

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.

Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Kelvin Munene is a crypto and finance journalist with over 5 years of experience, offering in-depth market analysis and expert commentary . With a Bachelor's degree in Journalism and Actuarial Science from Mount Kenya University, Kelvin is known for his meticulous research and strong writing skills, particularly in cryptocurrency, blockchain, and financial markets. His work has been featured across top industry publications such as Coingape, Cryptobasic, MetaNews, Cryptotimes, Coinedition, TheCoinrepublic, Cryptotale, and Analytics Insight among others, where he consistently provides timely updates and insightful content. Kelvin’s focus lies in uncovering emerging trends in the crypto space, delivering factual and data-driven analyses that help readers make informed decisions. His expertise extends across market cycles, technological innovations, and regulatory shifts that shape the crypto landscape. Beyond his professional achievements, Kelvin has a passion for chess, traveling, and exploring new adventures.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.