The US Department of Justice regards cryptocurrencies as a challenge to the law-enforcement system, which with the right approach could become a useful tool for society. The conclusion is contained in the 71-page report by the Office of the Attorney General’s cyber and digital technologies working group.
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Attorney General William Barr acknowledged that cryptocurrencies “could fundamentally alter” the relationship between citizens. Over two years, the authors of the report searched for evidence that digital assets “do not undermine public or national security,” but found none.
The document contains three sections. The first provides an overview of the cryptocurrency industry, blockchain, and threats. The authors identified money laundering, tax evasion, as well as hacker attacks among the threats.
In the second and third sections, the discussion centers on enforcement mechanisms and the challenges involved in investigating crimes related to cryptocurrencies.
The document also mentions the DeFi sector separately. Authorities note that they continue to monitor its development, despite the slow pace of regulatory groundwork.
One of the problems the authors identify is the relocation of cryptocurrency companies to more friendly jurisdictions. A few days before the document’s publication about the possibility of moving Ripple’s headquarters to Europe or Asia, stated Ripple’s co-founder Chris Larsen. He cited excessive regulation of the industry in the United States as the reason.
The working group gave particular attention to anonymity and national security. Experts argue that as cryptocurrencies spread, the opportunities for wrongdoing also expand. The authorities reserve the right to “assert jurisdiction over violators anywhere in the world,” as well as over foreign cryptocurrency platforms “if they affect financial and computer systems in the United States.”
“For cryptocurrency to realise its truly revolutionary potential, it is important to address these risks,” the report says.
The working group’s work has not been well received in the crypto community. Ripple CEO Brad Garlinghouse called the document contradictory and lacking regulatory clarity. He says honest players are trying to follow the rules, but the lack of a single legal approach in the United States makes this harder.
An 70+ page contradictory report is not regulatory clarity — many responsible private players are trying to follow the rules, but that becomes increasingly hard when there’s no single arbiter of the law (5+ govt agencies with different PoVs on crypto). (1/2) https://t.co/PSsT8mCzpN
— Brad Garlinghouse (@bgarlinghouse) October 8, 2020
Jerry Brito, director of the crypto-focused legal advocacy group Coin Center, noted that there is nothing in anonymous cryptocurrency that would prevent financial firms from meeting their obligations under the law.
5/ I think this is just plain wrong. There is nothing about anonymous cryptocurrency that would prevent an MSB from fully meeting its BSA obligations. Indeed FinCEN has said as much. pic.twitter.com/Qc1mNGNh7Y
— jerrybrito (@jerrybrito) October 8, 2020
Since 2019, the United States has introduced 32 bills regulating the cryptocurrency industry and blockchain.
Most of the documents focus on building a regulatory framework. The rest concerns the possible use of digital assets for criminal purposes, potential government use of blockchain, and the concept of a digital dollar.
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