The agency disapproves of privacy-oriented cryptocurrencies. The document leans more toward more regulation rather than toward development.
The expansion of Bitcoin and other cryptocurrencies worldwide attracts supervisory entities, regulators, and law enforcement agencies. The US Department of Justice in particular reportedly has its eye on crypto assets.
The agency recently released an 83-page document, which the Cyber-Digital Task Force prepared. It reviews the potential “threats” of cryptocurrencies, how authorities have countered them, and how they affect current society.
This framework of legal action highlights how crypto assets would serve to perform criminal actions, crimes, or fraud. The report shows four aspects, two of which are: the level of disapproval of privacy-oriented cryptocurrencies and recognition of the technology that does not seem to convince the authorities.
Private Cryptocurrencies and Criminal Activities
The Justice Department report especially mentions privacy-oriented cryptocurrencies such as Monero, Zcash, and Dash. However, their inclusion is not due to a technological feature to highlight. The entity believes that these are elements that serve to hide possible “criminal activities.”
The department makes this claim as it considers that users usually trade these cryptocurrencies for others such as Bitcoin. The operations would indicate the execution of a “digital asset overlay technique” or “chain jump”.
It is striking that the agency stated that, after seizing or confiscating private cryptocurrencies, they do not usually liquidate the assets. “Doing so would send them back to the trade for possible future criminal use,” the department argues.
According to the department, those cryptocurrency services operating with Monero, Zcash, or Dash could be contributing to money laundering and the financing of criminal activities. To prevent this situation, they recommend adopting appropriate AML/CFT protocols.
Regulation Rather Than Development of Bitcoin
The document leans more towards setting stricter parameters for cryptocurrencies. However, that may limit the development of Bitcoin and other blockchain networks as digital systems. Of course, there are some prominent aspects of innovation that they would relegate to the guidelines for their control.
Sujit Raman, leader of the Cyber-Digital Task Force, introduces the report by noting that cryptocurrencies “represent a transformational way of storing and exchanging value.” Concerning blockchain, Raman stressed that “it raises great possibilities for humans to flourish.”
He mentioned that multiple organizations around the world are exploring the potential applications of DLT. Among those entities are national governments, as well as industrial and academic sectors. However, the official explained that innovations must go hand in hand with public policies establishing conditions “that help the innovative spirit thrive.”
The department assumes that cryptocurrencies and the technology that accompanies them are a “threat”. They repeat that word up to 36 times throughout the document. The situation is magnified as the “US national security” would be at risk.
The Department of Justice lists the US institutions that would be ready to act in case of possible adverse scenarios. Those entities include the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), the Financial Crimes Enforcement Network (FinCEN), the Office of Foreign Assets Control (OFAC), units of the Department of the Treasury, and the Department of Justice itself.
By Alexander Salazar