US Treasury Seeks Comments on Illicit Crypto Funding Risks


The U.S. Treasury Department is seeking public comment on possible illicit finance and national security risks posed by the use of digital assets, as part of the agency’s mandate under President Biden’s March Executive Order. to study the development of cryptocurrency.

The request for comment, posted on Monday, also asks the public for suggestions to mitigate these risks before the Nov. 3 deadline.

The Treasury, in a version of the Request for Comments document on the Federal Register website, said crypto has been used in sophisticated financial networks and activities related to cybercrime, including through ransomware. The growing use of digital assets has increased the risk of crimes such as money laundering, terrorist financing, fraud, theft and corruption, according to the document.

Brian Nelson, the Treasury’s undersecretary for terrorism and financial intelligence, said in a statement Monday that public input will help the agency put controls in place to hold bad actors accountable and identify potential loopholes in the process. existing app.

Various stakeholders, including crypto industry advocates, members of civil society, traditional financial institutions and crypto businesses, are expected to provide feedback, according to Alex Zerden, director of the technology advisory firm. financial and risk management Capitol Peak Strategies LLC.

“This [commentary process] shows that the Treasury takes public engagement very seriously … from a risk perspective, as opposed to a risk and opportunity perspective,” said Zerden, a former Treasury official in the Obama and Trump administrations. . He added that it will ultimately be up to the Treasury to determine how to incorporate the feedback it receives into its policy-making process.

Any possible Treasury regulations that consider public feedback could potentially be pushed back by the crypto industry. The Treasury Financial Crimes Network and the Federal Reserve Board in 2020 proposed rules requiring financial institutions and crypto businesses to collect and transmit sender and recipient details on crypto transactions over $3,000. The plan received thousands of comments from the public, many of which opposed the proposed new rules. The controversial idea was shelved in January 2021, in part because the Biden administration imposed a regulatory freeze, which is common for incoming administrations. The rules remain in proposal status.

The request for comment comes as the crypto market experiences another round of volatility, adding to calls for greater regulatory scrutiny. Bitcoin, the world’s largest cryptocurrency by market capitalization, traded at $18,776 earlier on Monday, down 4.8% from its levels at the end of Sunday, before recently returning to above- above $19,000.

The Treasury Department is expected to lay out the risks it perceives cryptocurrencies could pose to consumers and the financial system in a series of reports expected to become public this month, The Wall Street Journal previously reported.

The reports, which Treasury is in the process of completing and sending to the White House, will feature Treasury’s analysis of the crypto markets and will each focus on one of four topics – the payment system, the consumer protection, illicit finance and financial stability – but they are unlikely to be. offer many specific policy prescriptions.

President Biden’s March Executive Order on Digital Assets commissioned the reports, directing other agencies to produce analysis as well.

The Biden administration released a broader set of frameworks from various agencies last Friday regarding regulatory approaches to developing the digital currency ecosystem. The Department of Justice also said it has called on more than 150 federal prosecutors across the country to bolster law enforcement efforts to combat the rise in crime linked to the use of cryptocurrencies such as than bitcoin.

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Write to Mengqi Sun at [email protected]

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