David Cohen, Treasury undersecretary for terrorism and financial intelligence, delivered a speech to Bloomberg News in New York on Tuesday, in which he called for federal banking laws to apply to bitcoin because of the major threat that the digital currency possesses: anonymity.
By implementing transparent federal banking laws on the virtual currency, the federal government can remain “ahead of the bad guys.” The anonymity element of bitcoin can lead to a variety of illicit financial risks, Cohen said, since digital currencies are not required to abide by any record-keeping requirements.
Therefore, one day, bitcoin can be utilized by terrorists and other criminals. “These are adaptable actors who are drawn to ungoverned spaces and so may increasingly look to this technology as an attractive way to transfer value,” the Treasury official stated.
Although Cohen noted that the U.S. applauds private enterprise and innovative technologies, the government maintains an inherent responsibility to look after the well-being of its citizens and ensure the safety of institutions everywhere.
“We place real value on the benefits of financial innovation. Advancements in technology that allow entrepreneurs and businesses to innovate, grow and hire are crucial to our country’s long-term economic success,” said Cohen. “We have a critical responsibility to protect the U.S. economy from illicit finance threats.”
The U.S. isn’t the only state to criticize bitcoin as a potential tool for terrorism. Canada, Russia and the European Union are only just some of the states to make that claim. With virtual banking heists, bankruptcies among some of the most popular bitcoin exchanges and denunciation by public officials, it’s quite amazing that bitcoin still remains alive today.
Indeed, there are plenty of money-laundering legislation that can track dollars, euros and yuan. However, the dollar can still somewhat be anonymous, too. Other elements in this world can also be anonymous and utilized for terrorist activities: gold and silver, diamonds and platinum, marijuana and cocaine.
Perhaps Colorado Democratic Congressman Jared Polis was correct in his sarcastic letter to Treasury Secretary Jack Lew in which he called for the ban of the U.S. dollar because it contains many of the same characteristics as bitcoin.
“I write today to express my concerns about United States dollar bills,” stated Polis. “The exchange of dollar bills, including high denomination bills, is currently unregulated and has allowed users to participate in illicit activity, while also being highly subject to forgery, theft, and loss.”
Criminals adapt to any situation and they are indifferent to government laws, rules and regulations. Whether it’s bitcoin or litecoin, gold or silver, they will find means to carry out their illicit transactions. Although many might argue with Cohen’s assertions that bitcoin needs regulation, the leaders of the cryptocurrency appear to be in favor, as we reported.
Bitcoiners, who were once entirely opposed to government intervention into their alternative currency, are embracing regulation. The argument now goes that regulation is a step to legitimization and survival. What will stop government from throwing its weight onto bitcoin and maybe even prohibiting it?
Singapore recently announced that they would regulate digital currencies. The response among the bitcoin community was: rejoice.
“Singapore is a fascinating country in terms of what they’ve been able to accomplish in the last 50 years and it’s because of decisions like this, which show they understand innovation and choose to embrace it with sensible regulation,” Brock Pierce, co-founder and chairman of GoCoin, told the Wall Street Journal.
