WASHINGTON — Crypto currencies pose a threat to U.S. sanctions and the dollar’s dominant role in the global economy, the Treasury said this week, and the U.S. has to adopt more safeguards to protect national security.
One of the biggest threats arising from new forms of electronic money, U.S. officials say, is that they could weaken sanctions on countries, companies and individuals the U.S. seeks to punish. The U.S. has more than 9,000 sanctions in place.
“The advent of crypto currencies makes it harder for sanctions to be effective,” deputy U.S. Treasury Secretary Wally Adeyemo told a Senate committee at a hearing this week. His testimony coincided with a Treasury report on how crypto could undermine sanctions.
Another worry: Digital currencies such as Bitcoin BTCUSD, +3.94% enable individuals and groups to engage in cybercrimes and circumvent the traditional dollar-based financial system to cover their tracks.
Take the growing spate of so-called ransomware attacks. Cybercriminals are hacking into large computer systems and demanding ransom payments from the victims in untraceable crypto currencies.
Just this week, the large TV station owner Sinclair Broadcast Group SBGI, +2.81% was hit by a large ransomware attack that temporarily took some of its 185 stations off the air. And during the summer, a devastating ransomware attack on Colonial Pipeline caused widespread gasoline shortages in the Southeast.
Ransomware groups have collected hundreds of millions of dollars through crypto payments, Adeyemo noted.
Digital currencies have seen their popularity surge in the past several years. Americans and others across the world have rushed to get in on crypto. Digital coins aren’t tied to central banks and users contend transactions are more secure.
A Senate crypto-currency hearing on Tuesday was aimed at trying to figure out way...