While the European Union (EU) has taken more proactive steps to regulate the region’s cryptocurrency industry, the United States seems to be dragging its feet in the matter.
Now, a keen industry observer, Michael DuBose, the former chief of Computer Crime and Intellectual Property Section (CCIPS) at the U.S. Department of Justice, has urged the United States to follow suit, in order not to be schemed out of the future of innovation.
In writing for the Press Herald, DuBose, now the president of Crystal Blockchain, Inc., explained that it is high time the U.S. policymakers reassessed the applicability of existing laws surrounding fiat-money and cryptocurrency. Ideally, regulators would reexamine the necessity of trying to formulate fresh laws to manage the cryptospace. According to him, the EU has already taken steps in the right direction, but they will soon need help in managing the borderless technology.
“The EU cannot bring about change without other governments being willing to regulate exchanges similarly, and perhaps the most important voice globally is the United States,” DuBose explained.
“The question for U.S. policymakers is, therefore, not whether to ban or create new regulations for cryptocurrencies, but rather whether the U.S.’ existing rules governing fiat currencies are appropriately applied to all cryptocurrencies. The EU answered “yes” to that question, but the U.S. has yet to speak so clearly.”
Further, DuBose said that the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) needs to act on the U.S.’ behalf as it has robust access to U.S. exchanges and the foremost investigative software developers. He noted that regulators need to acclimatize with the capabilities and limits of the cryptocurrency to make sound policies.
Anonymity a Non-Issue with Bitcoin
Further speaking to the issue of non-traceability, DeBose cited a brief by David Carlisle of the Centre for Financial Crime and Security Studies at the Royal United Services Institute, saying cryptocurrencies like “Bitcoin [are] pseudonymous, not anonymous. You can trace the bitcoin going to one wallet to another, unlike Monero, Zcash or Dash that have blockchains that are less transparent.” Possessing the right software, he explained that most blockchain-based currencies are easier to track than fiat currencies like the dollar. DuBose said:
“Let’s dispense with the assumption that the only uses for cryptocurrency are illegal. This misperception stems from its early exploitation on the darknet and the mistaken belief that all cryptocurrencies are ‘anonymous’ and impervious to attribution for ownership or purpose. The reality is quite different.”
Lately, the Parliament embarked on a study mirroring the use of cryptocurrencies in terrorism sponsorship and surprisingly realized that the criminal chain hardly adopts the innovation since they want to shield their illicit operations from the critical eye of advanced technology.
Interestingly, fraudsters are beginning to understand that bitcoin is not an excellent tool for crime, as enforcement agencies such as the Europol use highly sophisticated methods to track down bitcoin-related crimes.
However, the study strongly recommended the strengthening of regulatory frameworks to discourage widespread use of cryptocurrency in money laundering, ransomware attacks, as well as other crypto-related cybercrimes.
Notably, the European Parliament’s fifth Anti-Money Laundering directive, for the first time, placed “virtual currency exchanges and custodian wallet providers” under the same regulations as the ones guiding conventional banks and other traditional financial institutions, demonstrating the regulator’s accommodating stance towards cryptocurrency.