The US Treasury discussed the need for regulation around both fiat and cryptocurrencies in a press release on Tuesday.
The undersecretary of the U.S. Treasury’s Office of Terrorism and Financial Intelligence stated:
“Kleptocrats and criminals are also attempting to find new ways around our controls to exploit the financial system.”
Sigal Mandleker referenced the use of cryptocurrencies for this purpose. This press release is a continuation of the discussions regarding money laundering laws that BlockExplorer looked at earlier this year, though this press release seems to indicate a stronger intent than previously seen.
In Mandleker’s address to the Securities Industry and Financial Markets Association Anti-Money Laundering and Financial Crimes Conference:
“The lack of AML/CFT regulation of virtual currency providers worldwide greatly exacerbates virtual currency’s illicit financing risks. Currently, we are one of the only major countries in the world, along with Japan and Australia, that regulate these activities for AML/CFT purposes. But we need many more countries to follow suit, and have made this a priority in our international outreach.”
The press release stressed the importance of a financial institution’s compliance with regulations and discussed its ongoing aggressive enforcement of regulation on the cryptocurrency market. The document specifically referred to a $110M USD fine against BTC-e (At the time of writing BTC-e’s domain has been seized by the US Treasury) a non-US based trading platform that had been trading with parties within US borders. The US Treasury’s reasoning for this (and other) fines and seizures is that the cryptocurrency trading platform was used for illegal purposes such as money laundering or theft.
What does this mean for cryptocurrencies going forward?
The US Treasury seems extremely committed to its attempt to regulate cryptocurrencies. The last half of the press release contains recommendations for compliance with regulators. Whether or not this aggressive attempt at regulation is good or bad for cryptocurrencies remains to be seen. One could imagine a world where simply owning cryptocurrency is viewed as illegal or where every single transaction must be tracked. And as discussed in BlockExplorer’s previous article, it can be extremely difficult to completely regulate cryptocurrencies, especially as there are some cryptocurrencies dedicated to high levels of anonymity and privacy.