U.S. Treasury Issued New Sanctions Guidance for the Crypto Industry

Jafrin  |  Oct 16, 2021

The U.S. Treasury has issued new crypto-specific guidance on dealing with the jurisdictions sanctioned by the U.S. government.

US Treasury Releases Crypto Industry Specific Guidance

On October 15, the U.S. Treasury's Office of Foreign Asset Control (OFAC) released new guidance on navigating U.S. sanctions. Per the guidance, the crypto industry plays a key role in preventing the blacklisted countries from exploiting cryptocurrencies to evade sanctions.

According to the report, hackers use ransomware to take down systems that control everything from hospital billing to manufacturing and stop only after receiving hefty payments usually in cryptocurrencies. Hence, the Treasury has advised crypto exchanges to use geolocation tools in order to block access from countries under American sanctions.

Deputy Treasury Secretary Wally Adeyemo said:

“Treasury is helping to stop ransomware attacks by making it difficult for criminals to profit from their crimes, but we need partners in the private sector to help prevent this illicit activity.”

The contents of the guidance largely push the idea that OFAC expects virtual currency operators to shoulder the same responsibility for avoiding sanctions violations as other financial institutions:

"As a general matter, U.S. persons, including members of the virtual currency industry, are responsible for ensuring they do not engage in unauthorized transactions or dealings with sanctioned persons or jurisdictions."

Cryptocurrency Businesses Must Develop Risk-Assessment Programs

In addition, the OFAC names a range of actors that must develop risk-assessment programs, including "technology companies, exchangers, administrators, miners, and wallet providers, as well as more traditional financial institutions that may have exposure to virtual currencies or their service providers."

The agency has also called for the use of analytical tools to identify the use of a VPN as part of its expectations as VPNs could dramatically alter the level of access that people in the U.S. have to platforms that they are legally barred from using.

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