New FinCEN Improvement Act Bill Puts Cryptocurrency Crimes Focus at Forefront
US Regulators Plan to Specifically Target Cryptocurrency Threats and Crimes
While the cryptocurrency community has surely been the source of a plethora of innovations and positive impacts for societies all around the world, there is no denying that a heavy criminal element lurks beneath the surface of some crypto ventures. Even in the beginning of Bitcoin, the currency was used and abused as an anonymous currency to facilitate a myriad of crimes.
And though the days of the Silk Road are largely gone and cooperation from governments all over the world has cracked down on the illegal drug trade aided by Bitcoin, lawmakers in 2018 need to respond to a new type of crime being committed using cryptocurrencies. These financial crimes range from traditional scams like Ponzi schemes to more sophisticated money laundering and tax crimes conducted using cryptocurrencies.
The rise of ICOs, or Initial Coin Offerings, in the past two years has been a catalyst for the exposure of many different crimes being committed using newly-forged blockchain technology. As governments globally seek to create a regulatory framework for taxing and monitoring cryptocurrency transactions, we well as the massive crypto trade market, the US federal government seems more concerned with dealing with the crimes native to the blockchain.
Financial Crimes Enforcement Network
The key focus of Congress when dealing with financial crimes on the blockchain has been in amending the FinCEN, or the Financial Crimes Enforcement Network. Proponents of the FinCEN Improvement Act argue that the legislation should be updated with a provision that would specifically address cryptocurrencies and blockchain-based transactions.
It is important to note that this is not the only provision being added to the FinCEN via the improvement measures. The Act would also add a provision which allows for tribal law cooperation and a section which responds to terror-related financial crimes.
But where cryptocurrencies are concerned, the revision to the existing law would simply revise language to reflect the importance of cryptocurrencies and anonymous digital forms of payment in the evolving world of financial crime. It would outline that while the currencies are often used in ways that fall under the category of “legal practices,” they are being “increasingly [used]… to move illicit funds.”
Revising FinCEN is only the first step in allowing financial crimes enforcement agencies the ability to effectively respond to the sophisticated threats posed by the illicit use of cryptocurrencies. Criminals moving their ill-gotten gains can use a network of currencies, wallets, and accounts to “clean” money, concealing its source from even the most tech-savvy investigators.
If the government is going to effectively respond to such a threat, they need to deeply understand the nature of the technologies that they are dealing with. Echoing the words of some senators, analysts argue that the United States is far behind in their institutional comprehension of how cryptocurrencies and blockchain technology works.
In order to force exchanges and ICOs to follow the regulations and rules essential to the prevention of some serious financial crimes, regulators need to clearly establish that cryptocurrencies belong in the existing framework for regulation, and that crimes on the blockchain will be pursued as effectively and seriously as crimes which occur in the real world with fiat money.