A lot of crypto enthusiasts desire privacy when using their coins, but law enforcement has other ideas. The US Secret Service recently asked Congress to tackle anonymous cryptocurrencies.
One of the original benefits touted about cryptocurrency was that one could be completely anonymous in how it was used. Such has proven not to be the case as transactions can be tracked across the blockchain. This has led to a rise in privacy-focused coins, such as Monero and Zcash. However, governments and law enforcement are leery about these anonymous cryptocurrencies.
Wanting Legislative Help
The US Secret Service is not thrilled by the use of these anonymous cryptocurrencies, and they’re asking Congress to do something about it. From their viewpoint, such virtual currencies are used for illegal things.
The deputy assistant director for the Office of Investigations for the Secret Service, Robert Novy, gave testimony to Congress. In it, he states:
We should … consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies.
One such challenge is dealing with crypto businesses that do not wish to hand over data to the federal government. Novy adds:
[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.
Claims of Illicit Use
Naturally, the claims that anonymous cryptocurrencies are used for illicit activities was brought up before Congress. Greg Nevano of Immigration and Customs Enforcement said:
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.
This FUD was also brought up by the associate director of the enforcement division for FinCEN, Thomas Ott. He testified:
We have seen virtual currency exploited to support billions of dollars in what we would consider suspicious activity.
It is true that a lot of illicit mining uses Monero, one of the main privacy-focused coins, the reality is that less than 1 percent of all cryptocurrency transactions are for illegal activities. Even Thomas Ott had to admit that standard financial methods, such as fiat currencies, wire transfers, etc., are used most of the time in regards to illegal buying and selling. Ott said:
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.
So far, the US government has been slow on drafting legislation concerning cryptocurrency. This push by the Secret Service may nudge Congress into doing something, which will likely have a negative impact. Overall, we’ll have to wait and see.
Do you think Congress will work on bills concerning anonymous cryptocurrencies? Let us know in the comments below.
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