The cryptocurrency market has spiked the interest from the media and regulators over the last several years. Its actual lack of established regulations leads to numerous alleged criminal activities, and the U.S. government is reportedly preparing to act against potential money-laundering schemes.
The director of the Financial Crimes Enforcement Network (FinCEN), Kenneth Blanco, has recently said that the country is looking for a way to introduce more strict enforcements on several cryptocurrency-related types of businesses.
It’s called the “travel rule,” and it would still require all crypto exchanges to verify the identities of each customer (a process known as KYC – know your customer). However, they would also need to identify the original parties and beneficiaries of transfers for over $3,000, and that information will be provided to counterparties, if applicable.
Blanco spoke last Friday at a conference in New York, where he added:
“It [travel rule] applies to convertible virtual currencies, and we expect that you will comply period. That’s what our expectation is. You will comply. I don’t know what the shock is. This is nothing new.”
Apparently, FinCEN introduced the travel rule back in 1996. Its original purpose was also anti-money laundering (AML), and it covered all financial institutions in the United States at that time. In 2013, the rule was updated to include all cryptocurrencies, as well. Despite the above, the CEO of CipherTrace, a blockchain-based forensics company, purportedly said that digital assets have never been considered as money, so the travel rule should not be including them.
It’s also worth noting that the U.S. Financial Action Task Force (FATF) had published a set of guidelines for cryptocurrency exchanges to follow. All exchanges have until June 2020 to adjust and start complying, as well.
While Bitcoin and other cryptocurrencies have been used mostly for beneficial purposes, they have also been implicated in alleged criminal activities.
On the other side stands the argument that cash is still the most used method for money laundering, as per research conducted by the EU. It was also supported by Yaya Fanusie, the director of analysis for the Foundation for Defense of Democracies Center on Sanctions and Illicit Finance. When asked about the most widely adopted form of money laundering, he said: “cold cash is still king.”