Noting that cryptocurrency is a “technology that could fundamentally transform how human beings interact and how we organize society,” yesterday U.S. Attorney General William Bar announced the publication of “Cryptocurrency: An Enforcement Framework,” calling it a ‘first-of-its kind’ effort.
Drafted by the Department of Justice Cyber Digital Task Force, it seeks to provide “a comprehensive overview of the emerging threats and enforcement challenges [that come] with the increasing prevalence and use of cryptocurrency,” and ensure that technology is safe and “does not imperil our public safety or national security.”
AG Bar also cited partnerships with other regulatory and enforcement partners, both within the US and globally and FBI Director Christopher Wray cited specific threats in the form of the increasing number of ransomware attacks, the ever-present possibility of terrorist attacks and the use of cryptocurrency for illicit ends.
A press release from the AG’s office summarizes the Framework as follows:
“[I]n Part I, the Framework provides a detailed threat overview, cataloging the three categories into which most illicit uses of cryptocurrency typically fall: (1) financial transactions associated with the commission of crimes; (2) money laundering and the shielding of legitimate activity from tax, reporting, or other legal requirements; and (3) crimes, such as theft, directly implicating the cryptocurrency marketplace itself.
Part II explores the various legal and regulatory tools at the government’s disposal to confront the threats posed by cryptocurrency’s illicit uses, and highlights the strong and growing partnership between the Department of Justice and the Securities and Exchange Commission, the Commodity Futures Commission, and agencies within the Department of the Treasury, among others, to enforce federal law in the cryptocurrency space.
Finally, the Enforcement Framework concludes in Part III with a discussion of the ongoing challenges the government faces in cryptocurrency enforcement—particularly with respect to business models (employed by certain cryptocurrency exchanges, platforms, kiosks, and casinos), and to activity (like “mixing” and “tumbling,” “chain hopping,” and certain instances of jurisdictional arbitrage) that may facilitate criminal activity.”