LONDON The United States on Friday said some firms in the digital asset space were not doing enough to stop the flow of illicit finance.

Cryptocurrency's role in terrorist financing and funding militant groups has come under renewed scrutiny following the deadly attacks in Israel by Palestinian militant group Hamas.

U.S. Deputy Treasury Secretary Wally Adeyemo, speaking at an event in London, said the "vast majority" of financial institutions want to help root out terrorist financing.

But, he said: "there are those, especially (in) the digital asset space, who wish to innovate without regards to its consequences, including protecting against illicit finance."

"Our expectation is that financial institutions and digital asset companies and others in the virtual currency ecosystem take steps to prevent terrorists from being able to access resources. If they do not act to prevent illicit financial flows, the United States and our partners will," Adeyemo added.

(Reporting by Elizabeth Howcroft; Editing by William James and Sachin Ravikumar)