US Treasury Demands Accountability from Non-US Stablecoin Issuers

• The Deputy Treasury Secretary stressed the obligation of foreign USD-based stablecoin issuers to block bad actors.
• He argued that the stablecoin issuers need to implement procedures preventing criminal entities from using their platforms.
• He cited the Binance settlement as a stark example, with a clear message that those aiding criminals will be held accountable.

On Wednesday, the U.S. Deputy Secretary of the Treasury Wally Adeyemo warned about the risks posed by non-U.S. stablecoin issuers that use the U.S. dollar as backing. Adeyemo argued that foreign stablecoin issuers are obliged to implement robust procedures preventing bad actors from misusing their stablecoins, and should not enjoy the privilege of banking on the U.S. dollar without accountability. Specifically, he remarked:

“We cannot allow dollar-backed stablecoin providers outside the United States to have the privilege of using our currency without the responsibility of putting in place procedures to prevent terrorists from abusing their platform.”

Reportedly, the Deputy Secretary of the Treasury commented on this subject of non-U.S. stablecoin issuers in a speech he is scheduled to give at a Blockchain Association event unfolding in Washington D.C.

Adeyemo also made reference to a speech from 2022 in which he emphasized the need for the industry to proactively take measures to prevent the utilization of virtual assets by transnational criminal organizations, terrorists, and rogue states. 

He lamented that the industry has not, in his view, fulfilled these goals. “While some have heeded our calls and taken steps to prevent illicit activity, the lack of action by too many firms – both large and small – represents a clear and present risk to our national security,” Adeyemo said.

Moreover, he referenced the recent settlement between the U.S. authorities and Binance. He claimed that Binance had been utilized by terrorists, drug traffickers, and individuals involved in child sexual abuse. 

Addressing those industry participants who intentionally ignore legal obligations and those promoting services aiding criminals and terrorists, he remarked: “We will find you and hold you accountable.”