The Act aims to:

• Protect consumers by requiring stablecoin issuers to maintain one-to-one reserves and prohibiting unbacked, algorithmic stablecoins. 
• Prevent illicit or unauthorized use of stablecoins by issuers and users. 
• Create federal and state regulatory regimes for stablecoin issuers that preserves the dual banking system. 

“Our problem is that actors are increasingly finding ways to hide their identities and move resources using virtual currency. What has always been true is that terrorists and other malign actors seek new ways to move their resources in light of the actions we are taking to cut them off from accessing the traditional financial system,” the Deputy Secretary said. 

"While we have had some success in rooting out illicit finance in the digital asset ecosystem, we need to build an oversight and enforcement regime that is capable of preventing this activity as more terrorists, transnational criminals, and rogue states turn to digital assets."

The Deputy Secretary set out three areas of reform: 

i. The introduction of a "secondary sanctions tool targeted at foreign digital asset providers that facilitate illicit finance."

ii. "Modernizing and closing gaps in existing authorities by expanding their reach to explicitly cover the key players and core activities of the digital assets ecosystem."

iii. Reforms to address "jurisdictional risk from offshore cryptocurrency platforms."  

While the Treasury continues to assess that "terrorists prefer to use traditional financial products and services," the Deputy Secretary said "we fear that without Congressional action to provide us with the necessary tools, the use of virtual assets by these actors will only grow."

CNBC interviewed Deputy Secretary Adeyemo on the use of cryptocurrency and digital assets by bad actors and why Congress needs to approve new regulation to fight against crypto crime.

In addition, the GMAC’s Digital Asset Markets Subcommittee will reassess any future developments in the digital asset ecosystem to provide further recommendations to the approach in the taxonomy, based on the guidance of its members. The Subcommittee aims to support effective rules and regulations for digital assets, and recommends continued collaboration between industry, standard-setting bodies, and the regulatory community.