Risk & Compliance Journal. Sanctions Treasury May Place Cryptocurrency Addresses on Sanctions List

By Samuel Rubenfeld
Mar 20, 2018 5:37 pm ET
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The symbols for the bitcoin and ethereum cryptocurrencies are displayed at the Crypto Investor Show in London on March 10, 2018.
The symbols for the bitcoin and ethereum cryptocurrencies are displayed at the Crypto Investor Show in London on March 10, 2018. Photo: Bloomberg News

The U.S. Treasury Department said it may start adding cryptocurrency addresses to its sanctions lists if officials can tie them to a blacklisted person.

In guidance documents issued on Monday alongside a new White House order banning Venezuelan cryptocurrencies, Treasury said it might add digital currency addresses to the sanctions list “to alert the public” to specific property associated with a blacklisted person. The listings “are not likely to be exhaustive,” the guidance said.

Digital currency addresses are alphanumeric identifiers, linked to online wallets, that represent a destination for a transfer of cryptocurrency. Bitcoin wallets allows two parties to transfer assets without any intermediaries, potentially acting as an avenue for nefarious actors.

The move by Treasury comes as governments grapple with the rise of digital currencies. Finance ministers and central bankers of G-20 countries are meeting this week in Buenos Aires to discuss how to tackle the risk of financial crime through digital currencies.

Companies, currency exchangers and others involved in digital currencies should develop a tailored, risk-based compliance program because “there is no single compliance program or solution suitable for every circumstance,” Treasury’s guidance advised.

Treasury will use sanctions in the fight against bad actors abusing digital currencies “as a complement to existing tools,” it said. A Treasury spokesman said the department’s work identifying digital currency addresses wouldn’t differ from its typical sanctions-targeting process, which includes the use of law enforcement information, classified intelligence and publicly available information.