Cryptocurrency and the legal landscape was discussed when US Deputy Attorney General Rod Rosenstein spoke at the 87th Interpol General Assembly in Dubai earlier this week. With the theme being “innovation”, Rosenstein raised the issue of cybercrime as an unfortunate side effect of emerging technologies such as cryptocurrency and the blockchain. He believes that cybercriminals will continue to use the internet and its associated applications to “damage information systems, steal data, commit fraud, violate privacy, attack critical infrastructure, and sexually exploit children.”
Rosenstein pointed towards cryptocurrencies as a tool currently used by cybercriminals. In a note that is sure to concern cryptocurrency libertarians, he said that regulating, seizing, and tracing cryptocurrencies would “demand a multinational response”. Rosenstein went on to talk about the legal aspect in more detail, saying:
We must not allow cybercriminals to hide behind cryptocurrencies. Virtual currencies have some legitimate uses, but bad actors are using them to fund crimes and to hide illicit proceeds. We must work together to make clear that the rule of law can reach the entire blockchain. To prevent virtual currency from being abused by criminals, terrorist financiers, or sanctions evaders, all of us must implement policies that mitigate the risks posed by the new technology.
Rosenstein’s comments come amid a crackdown by US authorities on unlicensed exchanges and ICOs, while many exchanges are implementing KYC regulations in a bid to get onside both existing and potentially incoming laws. A report from accountancy firm KPMG recently stated that for cryptocurrency to reach its potential it needs to attract institutional money, which it will only do by falling in line with existing protocols and laws.
As most will be aware, Bitcoin and cryptocurrencies were purposefully designed to be anti-establishment. It will be interesting to see what can be implemented both on a national and international level to allow the asset class to grow, and at the same time limit the illegal activity which some still see as its primary use case.