U.S. Treasury's latest stance: Cryptocurrencies will not be tolerated to support illegal activities, balancing innovation with national security

The US Treasury Department held a meeting yesterday to discuss the challenges facing the regulation of the digital asset industry.

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Source: Figure Worm

Industry thought leaders and compliance experts attended this working session to discuss how to prevent money launderers, terrorist financiers and other bad actors from abusing cryptocurrencies.

It is worth noting that the US Treasury Department stated that it will not tolerate the use of cryptocurrencies to support illegal activities.

Just yesterday, the U.S. Treasury Office of Foreign Assets Control (OFAC) sanctioned two Chinese citizens-Tian Yinyin and Li Jiadong-claiming they were involved in a multi-million dollar cryptocurrency exchange hack Money laundering. In addition, OFAC added 20 Bitcoin addresses to its sanctions list, all of which are related to both of them.

US Treasury Secretary Steven Mnuchin said at the meeting:

"The United States welcomes responsible innovation, including new technologies that can improve the efficiency of the financial system. We must ensure that we maintain a balance between innovation and the protection of national security and the integrity of the financial system."

Mnuchin has been advocating the eradication of bad actors from the cryptocurrency space. He once described the issue as a "national security issue." He also said at the time that "very, very strong" regulations were needed to ensure that cryptocurrencies did not "emphasize risks to the financial system" like anonymous bank accounts in Switzerland. In fact, as early as last year, he stated that US regulators might introduce new regulations on cryptocurrencies to ensure that they will not adversely affect the financial system.

In an interview with CNBC "Squawk Box" last July, Mnuchin said,

"I won't talk about Bitcoin for another 10 years, and I can assure you that (…) I bet that even after 5 or 6 years, I won't talk about Bitcoin again as Minister of Finance. I can I assure you that I personally will not buy Bitcoin. "

Last month, US President Donald Trump's 2021 budget also proposed that the Secretary Service be transferred back to the Treasury to help fight crypto-related crime. If the proposal is passed, the US Treasury will have more regulatory powers in the cryptocurrency space.

In addition, the Internal Revenue Service will hold a summit today at its Washington, DC headquarters to discuss tax-related issues related to cryptocurrencies. The summit will have four 90-minute panels that will discuss technology updates, tax issues facing crypto exchanges, tax filing preparation, and regulatory compliance.