TL;DR: David Murray, Vice President of the Financial Integrity Network, testified before the United States Senate recently. He delivered remarks to the Banking Committee regarding Human Trafficking and its Intersection With the Financial System, urging lawmakers to use the Bank Secrecy Act to ultimately regulate Bitcoin miners into helping law enforcement in criminal matters.
Witness to US Senate: Use Bank Secrecy Act, Regulate Bitcoin Miners
Among his various prescription suggestions to help curb human trafficking, Murray insisted, “Congress should create a new class of financial institution under the [Banking Secrecy Act (BSA)] to cover firms involved in convertible virtual currency transactions: virtual asset service providers (VASPs), which are firms involved in convertible virtual currency transactions. VASPs should include cryptocurrency service providers that are already covered by the BSA as well as virtual asset services that currently fall outside the scope of the BSA.”
The BSA is an almost a half-century old piece of legislation requiring those participating in the US financial system to cooperate with law enforcement when it comes to crimes such as money laundering. The key to employing it appears to be what is designated as a financial institution covered under the Act. “Virtual assets,” he continued, “are vulnerable to illicit finance because they offer rapid and irrevocable settlement and the potential for anonymity. Importantly, some virtual assets are traded through decentralized networks, with no central oversight body. In other words, there is no entity performing a governance function and controlling admission to the payment system.”
And because they’re so unusually different in this regard, using the BSA against them as a regulatory tool requires some blockchain literacy, savvy. Transactions within the legacy finance system trigger mandatory US Treasury Department reporting when they climb above $5,000. How would such a law apply to a decentralized structure such as Bitcoin? Nevertheless, Murray believes besides exchanges and custodial services, “virtual asset transaction validators,” miners of a cryptocurrency network qualify as money services businesses.
Miners would therefore have to register and keep track of their customers, Murray appeared to imply. That might not only be impossible but also highly impractical, and a few experts have even weighed-in to stress it could also be unconstitutional. Before joining the Financial Integrity Network, Murray worked for nearly a decade at the US Treasury.
DISCLOSURE: The author holds cryptocurrency as part of his financial portfolio, including BCH.
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