The U.S. government has acknowledged monitoring the progression of cryptocurrencies. However, Bitcoin’s transparent public ledger and pseudonymity may allow it to fly under the radar.
U.S. Gov’t Monitoring Bitcoin Since Beginning
CSRA Inc., which provides information technology services to the U.S. Department of Homeland Security, has confirmed to Newsweek that Bitcoin was under surveillance as early as its initial development. The biggest concern is that the peer-to-peer, trustless monetary network may lead to an unprecedented creation of an absolutely anonymous one. If a truly anonymous money is invented, authorities fear that terrorists and criminals can bypass conventional financial safeguards and fund their illicit activities.
However, the U.S. government is not completely against cryptocurrency. It seeks only to prevent those with absolute anonymity from infiltrating the financial system – should the need arise.
Joshua Baron, an information scientist at the RAND Corporation – an entity that works with the U.S. government, told Newsweek,
[…] we are looking at ways for the government to disrupt any new virtual currencies that might be designed and deployed by terrorists, non-state actors or insurgents for everyday use.
According to Baron, further research on the subject matter will be released in the coming months.
‘Do-No-Harm’ Approach
Although regulations loom for fintech in general, innovation will be allowed to evolve as U.S. Treasury officials say they’re following a “do-no-harm” approach to cryptocurrencies.
As Bitcoin is pseudonymous, its users, in many instances, can be traced through its public ledger as well as other tracking techniques and third-party services. However, Baron adds that RAND’s research is not an attack on Bitcoin as criminals would prefer something more covert, considering Bitcoin’s transparent and publicly accessible ledger.
Criminals Prefer Banks, Not Crypto
The conventional financial systems count on ‘transparent’ know-your-customer (KYC) regulations to prevent terrorism and criminal funding. The practice of this KYC ‘transparency’ is not only carried out in the U.S. but the entire world. The majority of the countries adhere to the financial guidelines imposed by the U.S. Moreover, some government agencies are now becoming proactive in their efforts to stop illicit activities.
For instance, the EU Commission is looking to introduce new ways of preventing terrorism and criminal funding. EU authorities will soon conduct random checks on cash, precious metals transfers, and shipments of prepaid cards between countries.
Indeed, many cryptocurrency users seek out ways to exchange money in a fast, secure and anonymous fashion, particularly with privacy-focused ones like Monero and Zcash. However, contrary to widespread belief, cryptocurrency ranks at the bottom of the list of criminals’ preferred methods for funding illicit activities, according to U.K.’s government report. Ironically, the highly regulated banks and ‘legal’ financial services topped the list.
Will cryptocurrency be allowed to grow by state authorities? Share your thoughts below!
Images courtesy of shutterstock, medium, rand.org
