Virtual currencies trigger real concern for the threat to national security


  A photo taken on February 6, 2018 shows a person in possession of a visual representation of the Bitcoin digital cryptocurrency, at the store

The topic aroused new interest following the mention of Bitcoin in the allegations to the officers of the Russian military intelligence by special adviser Robert Mueller at the start of this month. | JACK GUEZ / AFP / Getty Images

US government officials are increasingly concerned about the potential threat to national security represented by the increase in cryptocurrencies.

Last week, the Department of Justice, Congress legislators and even the Federal Reserve President Jerome Powell expressed concern over the misuse of digital currencies, especially for the laundering of money. The theme aroused new interest following the mention of Bitcoin in the indictments of Russian military intelligence officers by special adviser Robert Mueller at the beginning of this month.

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Both critics and cryptocurrency champions agree that policy is right toward the emerging fin ancial technology may be the key to the future of the newborn industry – as well as the ability of the United States and its allies to cut funds for terrorists and rogue states.

In a report published on July 20, the Justice Department declared that it had set up a digital money initiative to accelerate prosecutions against money laundering in cases of cryptocurrency, which is increasingly used in illicit financing. The initiative aims to encourage cybercrime research using cryptocurrencies through federal law enforcement

Investigators also noted an increase in money laundering through a series of virtual currency transactions.

"While order forces have made giant strides to track virtual currency transactions, criminals often recycle their virtual currency by mixing one user's money with more users or sending their virtual currency through a complicated series of transactions, "wrote the Attorney General's Cyber ​​Digital Task Force.

argument of illicit financing using virtual currencies has also fueled the passion for the recent Congressional hearings.

"We should prohibit US persons from buying or extracting cryptocurrencies," representative Brad Sherman (D-Calif.), A senior Democratic official in the House Services Committee, declared at the July 19 hearing. "There is nothing that can be done with the cryptocurrency that can not be done with sovereign money that is meritorious and useful to society."

At the beginning of that day, Powell expressed similar concern, although he had not requested the absolute prohibition of cryptocurrencies. Virtual currencies are scarce for payments and value storage, Powell said, but great, "if you're trying to hide or recycle money."

Powell said that international regulators are increasingly concerned about the role of virtual currencies in the financing of terrorism and the financing of other illegal activities.

"Blockchain and the technology behind it is a bit like the Internet in the early 90s," said Gilbert Verdian, a former British Treasury official and the Ministry of Justice. He added that when his government began looking at Bitcoin transactions, he saw some of the same patterns in other ways of financing terror.

"You're seeing a lot of potential abuses," said Verdian, who founded a blockchain startup called Quant in 2015.

So far, the US government's relatively agnostic approach to digital assets looks more like to Verdian's opinion that to Sherman's, reflecting a broader embrace of the underlying technology's potential with respect to money laundering concerns.

A senior congressman, Rep. Bob Goodlatte (R-Va.), President of the House Judiciary Committee, also said that he holds up to $ 80,000 of bitcoins, bitcoin liquidity and ether together in his financial statement for 2017. The conservative of Virginia sold between $ 2,000 and $ 30,000 in Bitcoin in December, close to the all-time peak of cryptocurrency.

Despite the peer-to-peer nature of many cryptocurrencies, most sales and purchases occur in online exchanges. However, supervision remains uneven, with several international exchanges operating in a gray, if not violent, area of ​​US anti-money laundering regulations.

One, the BTC-e, based in Russia, was closed by US officials in coordination with the forces of the European order. An alleged exchange operator, a Russian citizen, has been arrested in Greece and will be tried in France.

Regulating trade more actively could help both clean up market fraud and manipulation in markets, and support anti-money laundering efforts, said former chairman of the Commodity Commodities Committee Gary Gensler in a testimony before the agriculture commission of last week.

Gensler argued strictly requires cryptocurrency exchanges to register with the CFTC and the Securities and Exchange Commission, whose authority on the stock exchanges is, at least for now, limited.

"[Y] or may have to pass a law to do so," said Gensler, the panel of Congress, which, like the House's Financial Services Committee, focused heavily on the potential for cryptocurrency abuse. Gensler even advertised the use of ledger technology at the center of cryptocurrencies to reduce money laundering.

"The beneficial properties will be traceable in a few milliseconds and nanoseconds," said Gensler, adding that the government should avoid being "rushed" into suppressing cryptocurrencies.

"As long as the stupid criminals continue to use Bitcoin we will be great, but the smart ones will turn around something that allows them to hide better behind this" said Agriculture President Mike Conaway (R-Texas), also # 39; he senior member of the Intelligence Committee.

Conaway referred to the fact that every Bitcoin transaction is recorded on a decentralized digital register, even if the new cryptocurrencies may be more difficult to trace.

For its part, the House's Financial Services Committee approved a law, HR 5036 (115), by the new representative Ted Budd (RN.C.), which would create a new task force chaired by the Secretary of State to study illicit financing with cryptocurrencies and, with the contribution of industry, propose new policies and laws to combat it.

The Budd bill, called the Financial Technology Protection Act, would also have made the sense of Congress that "the Federal Government should prioritize investigations into terrorism and the illicit use of new financial technologies, including digital currencies. "

If converted into law, it could also constitute what might be Congress's first attempt to officially define virtual currency – a potentially important milestone, since it could establish a future legal precedent.

The committee announced the bill Tuesday with a vote of 57-0. It is unclear whether the Senate will adopt legislation amid a crowded legislative calendar as Congress moves towards election season.

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