US unveils enforcement framework to combat terrorist, criminal cryptocurrency activities
US officials have outlined how criminal applications of blockchain technologies and cryptocurrency should be responded to through a new framework.
While the possibilities of the blockchain are considered “breathtaking” prospects that could allow humans to “flourish,” the new “cryptocurrency enforcement framework” focuses on darker applications — such as the use of virtual assets in criminal enterprises.
The US Department of Justice (DoJ), together with Attorney General William Barr, announced the public release of the framework on Thursday.
The report is based on the efforts of the Attorney General’s Cyber-Digital Task Force, tasked with investigating “emerging threats and enforcement challenges associated with the increasing prevalence and use of cryptocurrency,” according to the department.
The document outlines DoJ and law enforcement response strategies to blockchain and cryptocurrency-related crimes. Split into three main sections, the 83-page framework document (.PDF) first outlines the applications of blockchain and cryptocurrencies, ranging from smart contracts, wallets, Initial Coin Offerings (ICOs), and the exchange of virtual coins themselves.
The report then examines today’s “illicit” uses of cryptocurrency, separating them into three categories: financial transactions associated with the commission of crimes; money laundering and the shielding of legitimate activity from tax, reporting, or other legal requirements; and direct crimes including theft.
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In particular, the framework says that cryptocurrency can be linked to organized crime outfits and terrorist activities.
“They can avoid large cash transactions and mitigate the risk of bank accounts being traced, or of banks notifying governments of suspicious activity,” the report says. “Criminals have used cryptocurrency, often in large amounts and transferred across international borders, as a new means to fund criminal conduct ranging from child exploitation to terrorist fundraising. Cryptocurrency also has been used to pay for illegal drugs, firearms, and tools to commit