One of the few Bitcoin whales willing to release public statements says a new enforcement framework from the US Department of Justice could have negative long-term ramifications on the crypto markets.
A new document from the DOJ entitled “Cryptocurrency Enforcement Framework” describes how multiple US agencies are working together to combat anyone who steals cryptocurrency or uses it to launder money or finance terrorism.
The framework, which is meant to describe how the DOJ enforces existing laws, asserts that the agency has the robust and sprawling authority to prosecute service providers and other entities that violate US regulations. The framework also states that the DOJ has the power to go after virtual asset service providers (VASPs) who violate US law “even when they are not located in the United States.”
The report says the DOJ considers the use of anonymous crypto assets such as Monero to be a “high risk activity” and cites crypto mixers and tumblers as potentially dangerous services that must follow anti-money laundering procedures.
All of this, says a pseudonymous and influential crypto whale who goes by the name Joe, does not bode well for the nascent crypto movement as leaders in the space push for support from regulators.
“Cryptocurrency Enforcement Framework, published by DOJ today, contains quite a few eye-openers. None of them exactly good for crypto markets, and ‘crypto’ in general, to be brutally honest.
What media immediately jumped on was red-flagging usage of ‘anonymity enhanced cryptocurrencies (AEC)’ such as Monero (XMR), Dash (DASH) and Zcash (ZEC) as ‘indicative of possible criminal conduct.’ AEC could possibly apply to privacy-enhancing BTC tech.
A full-on attack on privacy-enhancing services or tools such as mixers and tumblers is articulated (either for Bitcoin or other cryptos). Justification is as follows: ‘[they are] frequently used by individuals who are laundering proceeds of virtual currency thefts’…
As expected, there is not much in terms of hard evidence to demonstrate diabolic nature of nefarious cryptocurrencies (such as real-world connection to actual terrorist activity). But it does not stop the document from drawing far-fetched projections of [an] apocalyptic future.”
Recent charges from the DoJ and the Commodity Futures Trading Commission against the cryptocurrency exchange BitMEX may offer a hint at what’s to come from US regulators and law enforcement agencies.
As for the illicit use of crypto in the real world, a recent report from British defense and aerospace company BAE Systems on behalf of the global financial messaging service provider SWIFT found that actual use of crypto assets in the money laundering space pales in comparison to the use of cash.
According to a comprehensive 2019 report from the RAND corporation, there is also little evidence to show terrorists are using cryptocurrency, although researchers caution this could change as technology evolves.
“We see little current evidence of the adoption of cryptocurrencies by terrorist organizations or the motivation to do so, but that very well might change as countermeasures shut off funding and as the cryptocurrency technology changes.”
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