Congressional watchdog calls for tighter regulation of crypto ATMs

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In a public report released earlier this week, the Government Accountability Office (GAO) recommends that the IRS and the Financial Crimes Enforcement Network (FinCEN) receive more information on the location of kiosks where people can turn money. money in crypto or vice versa. In its report, the GAO cites the potential use of crypto in sex trafficking and drug trafficking as the reason the government should have more information on one of the ways people get crypto outside of the markets. more tightly regulated trade.

While kiosk operators must already comply with several regulations (they must register with FinCEN, keep transaction records, and collect additional information for transfers over $ 3,000), the GAO argues that it is always difficult for government agencies to get the full picture. Not only does the government have to deal with people who operate unregistered kiosks, but registered operators are not required to provide a list of the locations where their kiosks are located. Although they must give FinCEN access to detailed information about a specific kiosk if the regulator requests it, the GAO says the lack of whereabouts information makes it difficult to target investigations to areas of higher risk of activity. drug or human trafficking.

The government does not know where all the kiosks are

This report has no legal force but is likely to have influence in Congress. The GAO provides non-partisan recommendations and information to Congress and other policymakers, often setting the tone for complex new topics like cryptocurrency. Lawmakers were given more access to the report, and the public version refers to information included in the original report, released in December, that was too sensitive to be included in a general publication.

You can read the full public version of the GAO report here (pdf), which I recommend for a detailed review of the progress of the app. It goes deeper into markets where people sell drugs for crypto and websites where sex workers can receive crypto for services.

Crypto kiosks have been implicated in other forms of crime as well: Recently, the FBI released a public service announcement warning the public against crooks using ATMs to perform high-tech wire transfer fraud, prompting people converting money into crypto and sending it under false pretenses. Crypto in general has also played an important role in the ransomware business plan, to which FinCEN paid particular attention last year, the regulator released a report indicating that ransomware payments for 2021 were on track. ‘reach a billion dollars.

Addresses linked to illegal activities were responsible for only a tiny fraction of blockchain transactions in 2021

However, research suggests that criminal activity is actually a small portion of blockchain transactions. Chainalysis, a blockchain analytics company, recently released a report estimating that addresses linked to illegal activity made only 0.15% of blockchain transactions by 2021. As Reuters points out, that number is likely to be increase as it continues to identify the addresses of criminals, but this is a significant decrease from the estimated percentage of illegal activity for 2020.

The report comes as the government appears to be stepping up enforcement of unlicensed Bitcoin purchases. Last year, federal agents raided several people who operated Bitcoin ATMs in New Hampshire, accusing them of operating an unlicensed money transmission business. The IRS has also called on lawmakers to give it more power to monitor large cryptocurrency transactions, and a new tax reporting requirement for minors has been incorporated into the recent infrastructure bill.

The crypto community has pushed back many of these measures this week, with former Twitter CEO and Bitcoin fan Jack Dorsey proposed a legal fund to help defend Bitcoin developers against litigation and lingering threats.

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