The United States has more than 9,000 sanctions in place, largely to punish countries such as North Korea, Iran and Venezuela for facilitating terrorism, violating human rights or committing other illicit behavior. The strength of the U.S. dollar and its role as the world’s reserve currency means that the United States can cut off countries, groups or individuals from much of the global financial system at its discretion. That has intensified efforts to find new ways to evade America’s sanctions, including by using digital currencies that do not flow through the traditional banking system.
The use of sanctions surged to record levels during the Trump administration, which averaged more than 1,000 new designations per year, according to the law firm Gibson, Dunn & Crutcher. This year, the Biden administration is on a pace to impose 900 sanctions, which would tie for the third-highest total on record.
The seven-page report offered little detail about how Treasury plans to adapt to the new digital financial architecture that is spreading around the world. The recommendations included investing in new technology and hiring staff with expertise in digital assets.
A senior Treasury official told reporters on Monday that one important measure to prevent the evasion of sanctions was greater coordination with other countries to make it more difficult for cryptocurrencies to be converted into government-issued money.
Last month, the Biden administration cracked down on the growing problem of ransomware attacks, expanding its use of sanctions to cut off digital payment systems that have allowed such criminal activity to flourish and threaten national security.