CFTC urges crackdown on the ‘allure of anonymity’ in cryptocurrencies

Anonymity allows digital assets to fund illicit activity and create risks to national security, which should not go unanswered. This was stated by CFTC Commissioner CFTC Christina Goldsmith Romero, Reuters.

The commissioner noted that cryptocurrencies are used by cybercriminals, with individuals, companies, hospitals and critical infrastructure facilities among their victims.

“Fraud is a defining feature of the digital asset markets,” she emphasized.

The commissioner said there is a need to address the problem of “insufficient visibility” of cryptocurrencies. According to her, it stems from the “allure of anonymity” that makes them attractive for illicit financing.

Goldsmith Romero urged compliant crypto firms not to use mixing services. They should build internal-control mechanisms to prevent money laundering and the financing of terrorism.

“Congress is already considering new laws to combat anonymity and digital identification,” she warned.

In April 2023, the U.S. Treasury warned about cybercriminals’ use of DeFi services to move and launder money.

Earlier, the European Parliament committees on Economic and Monetary Affairs and Internal Affairs approved a draft bill expanding AML requirements to DAOs, NFT and DeFi platforms AML-requirements in line with TradFi.

In August 2022, OFAC added Tornado Cash to the sanctions list for suspected laundering of over $7 billion in cryptocurrencies. The service was used by, among others, the North Korean hacking group Lazarus Group.