House lawmakers held a hearing examining the risks within the flourishing cryptocurrency market and its potential to fund terrorism activities or evade U.S. legal sanctions, specifically understanding how the private sector can work in tandem with the federal government to protect the U.S.’s national security.
Witnesses working within the cryptocurrency industry testified before the House Committee on Homeland Security, discussing collaboration opportunities that can distinguish money laundering through cryptocurrency and legitimate transactions.
Each testimony broadly reiterated cryptocurrency firms’ willingness to partner with federal law enforcement to curb abuses of digital currency transactions. John Kothanek, the vice president of global intelligence at crypto trading platform Coinbase, said that his team wants to remove illegal transactions from the crypto industry.
“We have built a collaborative partnership with law enforcement agencies in concert with our strict privacy commitments to our customers to pursue bad actors in the crypto space,” he testified.
Chief among concerns discussed in the hearing was the recent trend of ransomware hackers demanding payments in cryptocurrencies, a strategy that usually helps anonymize the recipient of the ransom. Rep. Elissa Slotkin, D-Mich., asked the witnesses how the cryptocurrency private sector plans to increase transparency in digital currency transactions.
Kothanek said that blockchain technology, the bedrock to most cryptocurrency transactions, is inherently designed to register users accessing certain data.
“If you are a cyber criminal and you’re using crypto, you’re going to have a bad day,” he said. “We are going to track you down and we’re going to find your finance and we’re going to hopefully help you, the government, seize that crypto.”
Concerns over cryptocurrency being used to circumvent the law and federal sanctions on foreign countries and groups mounted when Russia invaded Ukraine in February, prompting the U.S. to impose economic sanctions on various state actors.
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