The United States Treasury is working on measures to contain risks associated with unhosted crypto wallets due to their anonymous nature.
Speaking during the 2022 Consensus conference on June 10, The Treasury deputy secretary Wally Adeyemo noted that financial institutions should be aware of individuals they transact with to eliminate promoting criminal activities through cryptocurrencies.
Although he did not detail how the implementation would be carried out, Adeyemo noted that the government seeks to uphold the sector’s innovative nature.
“We are working to address the unique risks associated with unhosted wallets. Because unhosted wallets are effectively managed on a blockchain, it can be challenging to determine who owns and controls them—creating opportunities to abuse this heightened anonymity,” he said.
Crypto part of financial future
The official also confirmed that the U.S. is generally moving towards crypto regulation considering the evolving digital nature of the finance sector.
Adeyemo noted the need to look into unhosted wallets, which are addresses on a blockchain, was necessitated by the possibility of Russia leveraging crypto to beat financial sanctions following Ukraine’s invasion. However, he added that there is no evidence Russia is using crypto to evade the sanctions.
At the same time, Adeyemo noted the move to regulate all sectors of the financial system is partly due to national security reasons. According to Adeyemo:
“America’s international position and ability to safeguard our national security rests in no small part on our global financial leadership. We in government know as you do that the future of the global financial system is increasingly digital.”
Increasing push for crypto regulations
The Treasury’s move comes barely three months after President Joe Biden signed an Executive Order requiring federal government agencies to study the development of the crypto sector.
Furthermore, the latest feedback from the Treasury adds to the growing list of proposed cryptocurrency regulations in the U.S.
Notably, this week, Wyoming senator Cynthia Lummis presented a crypto regulation bill before Congress. If passed into law, the bill will clarify the proper agencies to regulate crypto alongside the classification of different assets.
Additionally, the White House has also commissioned research into Bitcoin mining to determine the asset’s energy consumption alongside the environmental impact.