Crypto Must End Anonymity for Illicit Finance, Says US Regulator – ProgramBusiness

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Anonymity allows crypto assets to fund illegal activities, a senior U.S. regulator said on Tuesday, posing national security risks that need to be addressed.

Christy Goldsmith Romero, commissioner at the US Commodity Futures Trading Commission, said cryptocurrencies were used to fund cybercrime with victims including individuals, businesses, hospitals and critical infrastructure.

“Fraud is a feature of digital asset markets, the human toll of which can be overlooked,” Romero told a City Week conference in London, adding that the lack of visibility in cryptomarkets needs to be addressed.

“It’s critical that governments and especially industry address what makes crypto so attractive to illicit finance, and that’s the lure of anonymity,” she said.

Legally compliant crypto companies should not use “mixers” or software tools that effectively anonymize users by aggregating and scrambling cryptocurrencies from thousands of addresses.

“Congress is already considering new anonymity and digital identity laws,” Romero said.

Compliant crypto businesses must show that they have internal controls in place to prevent money laundering and terrorist financing.

Last year, the United States imposed sanctions on virtual currency mixer Tornado Cash, alleging it was helping hackers, including from North Korea, launder cybercrime proceeds.

“It is possible for all crypto companies to distance themselves from mixers and anonymity-enhancing technology while providing customers with financial privacy,” Romero said.

Regulators in the United States, European Union, Britain and elsewhere are trying to get crypto under control before global standards are agreed and introduced for a borderless industry.

“As a result, different people are doing different things and, yes, absolutely, companies pick and choose where to locate,” John Schindler, Secretary General of the Financial Stability Board (FSB), G20 Coordinator for Financial Rules, says at the conference.

The FSB will soon release the final version of recommendations to regulate crypto assets, he said.

“We are catching up with this innovation that is going so fast,” Schindler added.

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