The sanctions Pompeo imposed had taken effect January 19, just a day before President Joe Biden was inaugurated, and had been roundly criticized by the United Nations and relief organisations.
Critics said the sanctions would exacerbate what is already one of the world's worst humanitarian crises by barring aid deliveries to civilians in the war-torn nation.
Treasury's license does not reverse Pompeo's designations and does not apply to specific members of the Houthi group who have been otherwise sanctioned.
The Trump administration's designation had sparked confusion in aid agencies and warnings from the UN, as well as senior Republicans, that it could have a devastating impact on a conflict-wracked nation facing the risk of famine.
Several aid groups had pleaded for Biden to immediately reverse the designation, with Oxfam America's Humanitarian Policy Lead Scott Paul saying, Lives hang in the balance.
The Iranian-supported Houthi rebels rule the capital and Yemen's north where the majority of the population lives, forcing international aid groups to work with them.
Agencies depend on the Houthis to deliver aid, and they pay salaries to Houthis to do so. Six years of war between a US-backed Arab coalition and the Houthi rebels have been catastrophic for Yemen, killing more than 112,000 people and reducing infrastructure from roads and hospitals to water and electricity networks to ruins.
It began with the Houthi takeover of the north in 2014, which prompted a destructive air campaign by the Saudi-led coalition, aimed at restoring the internationally recognised government.
Most of Yemen's 30 million people rely on international aid to survive. The UN says 13.5 million Yemenis already face acute food insecurity, a figure that could rise to 16 million by June.
The US designation move was part of the Trump administration's broader effort to isolate and cripple Iran. It also showed support to a close US ally, Saudi Arabia, which leads the anti-Houthi coalition in the war.
Saudi Arabia has advocated the terror designation, hoping it would pressure the rebels to reach a peace deal. Past rounds of peace talks and cease-fire agreements have faltered.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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