US to impose sanctions aimed at limiting cryptocurrency payments

The US Treasury department plans to impose sanctions as soon as next week, in an effort to tackle hackers using digital currency to profit from ransomware attacks. The Biden administration hopes to tackle cryptocurrency, which in recent years has been the financial backbone of the criminal industry and a rising national security threat.

According to various reports, the Treasury’s Office of Foreign Assets Control plans to issue updated guidance to companies on how to avoid breaking the US law when making ransomware payments to cybercriminals.

Ransomware threat gained global attention in May when alleged Russian cybercriminals forced the Colonial Pipeline, which transports some 45% of all fuel consumed on the East Coast, to shut down for days. This incident led to shortages at gas stations on the east coast, resulting in the Colonial Pipeline paying the hackers $4.4 million to recover the company’s data. Administration officials have raised concerns about how multimillion-dollar payments to ransomware groups based in Eastern Europe and Russia have allowed hackers to invest in new tools for such attacks. This has also fueled debate between fintech proponents and policy makers over how to protect the market against criminals, terrorists and other bad actors without smothering its growth or creating long-term national security problems.

To effectively disrupt illicit crypto transactions, as per fn, Treasury would need to target the digital wallets that receive ransom transactions, the crypto platforms that help exchange one set of blockchain coins for another to obscure the culprits and the people that own or manage those operations. According to analysts, the sanctions are expected to single out specific targets, rather than blacklist the entire crypto infrastructure when ransomware transactions are suspected of taking place. Nonetheless, the action will be intended to deter others from continuing their activities.

Ari Redbord, head of legal and government affairs, TRM Labs, said the Biden administration has so far worked with the private sector to harden cyber defences as bad actors have taken advantage of the speed and cross-border reach of cryptocurrency. “An action of this kind would be an aggressive, proactive approach to going after those who facilitate ransomware payments,” he said. “Furthermore, any sanctions levied by the administration would most likely be designed to go after those illicit actors themselves, not cryptocurrency or the technology itself, which is simply the payment mechanism.”

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Biden administration has focused enforcement efforts on the primary sources of the attacks, which both private sector and government analysts say are in Russia and former Soviet satellite nations where Moscow exerts strong political influence.