The U.S. Secret Service is taking a good look at privacy-focused cryptocurrencies like Monero and Zcash while urging Congress to “consider additional legislative or regulatory actions.”
Fear of Privacy Coins
Last week, a top official from the federal law enforcement agency reportedly requested help from Congress in combating the use of privacy coins for illicit purposes. Robert Novy, Deputy Assistant Director of the Secret Service’s Office of Investigations, wrote:
We should … consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies.
He added, as reported by Forbes:
[C]ontinued Congressional attention is warranted to ensure law enforcement agencies maintain lawful access to critical sources of evidence, regardless of where, or in what form, that information is stored.
Greg Nevano, an official in the investigations division of the Immigration and Customs Enforcement, backed up Novy’s opinion, stating:
Some newer cryptocurrencies have features that make the tracing of them quite complicated. These new anonymity-enhanced cryptocurrencies are clearly ripe for illicit use in an effort to subvert legitimate law enforcement inquiries. Although it is more difficult to trace the movement of illicit proceeds using these newer anonymity-enhanced cryptocurrencies, it is not impossible.
‘One of the Greatest Emerging Threats to U.S. National Security’
Some members of Congress, like Rep. Robert Pittenger of North Carolina, are already on board with increasing government regulation in regards to privacy coins. “One of the greatest emerging threats to U.S. national security is [the] illicit use of virtual or cryptocurrencies,” he stated during the hearing.
The Financial Crimes Enforcement Network (FinCEN) unsurprisingly shares a similar opinion. After citing $1 billion in cryptocurrency-denominated ransomware payments and $1.5 billion stolen in exchange hacks over a two year period, Thomas Ott, associate director of the Department of the Treasury’s bureau noted:
We have seen virtual currency exploited to support billions of dollars in what we would consider suspicious activity.
Nevertheless, it is important to keep things in perspective. Traditional means still dominate the world of financial crime, and cash remains the least traceable way to conduct illegal purchases and sales.
Still, the use of privacy coins for illicit means still has plenty of room to flourish. Ott noted:
While traditional financial methods remain the primary vehicle for most illicit activity, FinCEN believes virtual currency presents specific illicit finance risks and that without vigilance and action, the scale of this activity could grow.
What do you think about the U.S. Secret Service’s opinion regarding privacy coins? Let us know in the comments below!
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