Government and industry push Bitcoin regulation to fight ransomware
Government and industry officials facing a ransomware epidemic, where hackers freeze a target’s computers and demand payment, focus on regulating cryptocurrency as the key to tackling the issue. scourge, said sources familiar with the work of a public-private task force. .
In a report released Thursday, the panel is expected to call for much more aggressive monitoring of bitcoin and other cryptocurrencies. While these have gained greater acceptance by investors over the past year, they remain the backbone of ransomware operators and other criminals who face little risk of prosecution in much of the world.
Ransomware gangs raised nearly $ 350 million last year, three times more than in 2019, two task force members wrote this week. Businesses, government agencies, hospitals and school systems are among the victims of ransomware groups, some of which U.S. officials say have friendly relations with nation states including North Korea and Russia.
“There’s a lot more that can be done to curb the abuse of these pretty amazing technologies,” said Philip Reiner, chief executive of the Institute for Security and Technology, which led the ransomware task force. He declined to comment on the report before its publication.
Just over a week ago, the US Department of Justice created a government ransomware group. Central bank regulators and financial crime investigators around the world are also wondering if and how cryptocurrencies should be regulated.
The new rules proposed by the public-private panel, some of which would require congressional action, are primarily aimed at breaking through the anonymity of cryptocurrency transactions, the sources said. If implemented, they could temper the enthusiasm of those who view cryptocurrencies as a safe haven from national monetary policies and government oversight of the financial activities of individuals, having exceeded $ 1 trillion in total capitalization.
The task force included representatives from the FBI and the United States Secret Service, as well as major tech and security companies. It will recommend measures such as extending the “know your customer” regulation to foreign exchange trading; impose stricter licensing requirements for those who deal in cryptocurrency; and extend money laundering rules to facilities such as currency conversion kiosks.
He also calls for the creation of a special team of experts within the Justice Department to facilitate cryptocurrency seizures, a process currently fraught with logistical and legal pitfalls.
Some of the ideas echo those proposed by the Financial Crimes Enforcement Network, which would expand disclosure rules for transactions worth more than $ 10,000.
Federal investigators said a proposal to register accounts would be particularly useful in identifying drug traffickers, human traffickers and terrorists as well as ransomware groups.
“It would be huge,” said a senior homeland security official, who spoke on condition of anonymity to discuss emerging policy proposals. “It’s a world that was created exactly to be anonymous, but at some point you have to give up something to make sure everyone is safe.”
Governments are already using the blockchain ledger that documents all Bitcoin transactions to bring in fees. Authorities last week arrested a man in Los Angeles and charged him with laundering more than $ 300 million through a service that combines transactions from multiple cryptocurrency wallets to find out who pays whom.
US Marshals Service records show that more than $ 150 million in crypto assets were seized last year and offered to the public at auction. Last week, the Marshal’s Service signed a $ 4.5 million deal with BitGo, a California-based exchange, to hold and sell more confiscated cryptocurrency.
But many of the exchanges, which are leading the critical operation to transform cryptocurrency into dollars or other widely accepted currencies, are in countries beyond the reach of U.S. regulators.
Reiner, of the Institute for Security and Technology, said international cooperation would be essential and that pressure could come from allies with similar regulations, which could help push trade in countries where Americans would hesitate to send their funds.
“Even though many crypto markets believe they have created their own networks, they still rely on existing financial markets,” Reiner said.