Cryptocurrencies help facilitate human trafficking and should be regulated much more tightly than at present, an expert on combating the slave trade told the US Senate.
In a written statement
David Murray, vice president of product and service development at the Financial Integrity Network, recommended that Congress create a new class of regulated financial institutions called “virtual asset transaction validators,” that is, in fact, regulated cryptocurrency miners.
“For these key players in cryptocurrency operations, such a regulatory regime will encourage due diligence regarding illegal operations,” Murray said in a statement before a hearing on human trafficking at the US Senate Subcommittee on National Security and International Trade. “The lack of system-wide management and control over financial crime for existing cryptocurrencies allows criminals to continue to work and prevent the United States from isolating fraudulent service providers from the US financial system,” he said.
Murray argues that miners should be able to decide who can work on the network and check any issuers, exchanges, or custodians they serve. Mining is not currently regulated by the Bank Secrecy Act (BSA), “but virtual asset transaction validators can be censors of principles for crypto assets if they fall within the scope of the BSA,” Murray said.
Such a system will be very different from the current state of affairs in open blockchains, which anyone can join without permission. But the openness of such systems makes them useful to criminals, including traffickers, Murray claimed.
“The trend towards decentralized and autonomous systems threatens our ability to control access to the US financial system,” he said.
Regulation of miners on the Murray system would be tantamount to a ban on open blockchains in the United States, said Peter Van Valkenburgh, director of research at Coin Center.
“This is called regulation, but in essence it will be a ban for US citizens or enterprises using open blockchains, because it will require them to use it in a controlled manner,” Van Valkenburg said in an interview with CoinDesk. “It’s just a ban on a whole kind of technology.”
Van Valkenburg argues that such a ban would be counterproductive in the context of the fight against crime.
“From a political point of view, the fact that this technology was legal and affordable was a boon to law enforcement because large US companies play a role in these networks, such as Coinbase and Kraken, and [другие] exchanges because they cooperate with law enforcement agencies, ”he said.
The other day, a representative of the United Nations (UN) said that cryptocurrencies greatly complicate the global effort to combat cybercrime due to their anonymity.