Government and industry push bitcoin regulation to fight ransomware

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Government and industry officials confronting an epidemic of ransomware, where hackers freeze the computers of a target and demand a payoff, are zeroing in on cryptocurrency regulation as the key to combating the scourge, sources familiar with the work of a public-private task force said.

In a report on Thursday, the panel of experts is expected to call for far more aggressive tracking of bitcoin and other cryptocurrencies. While those have won greater acceptance among investors over the past year, they remain the lifeblood of ransomware operators and other criminals who face little risk of prosecution in much of the world.

Ransomware gangs collected almost $350 million last year, up threefold from 2019, two members of the task force wrote this week. Companies, 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 constrain the abuse of these pretty amazing technologies,” said Philip Reiner, chief executive of the Institute for Security and Technology, who led the Ransomware Task Force. He declined to comment on the report before its release.

Just a week ago, the U.S. Department of Justice established a government group on ransomware. Central bank regulators and financial crime investigators worldwide are also debating if and how cryptocurrencies should be regulated.

The new rules proposed by the public-private panel, some of which would need Congressional action, are mostly aimed at piercing the anonymity of cryptocurrency transactions, the sources said. If implemented, they could temper enthusiasm among those who see the cryptocurrencies as a refuge from national monetary policies and government oversight of individuals’ financial activities, having surged past $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 steps such as extending “know-your-customer” regulations to currency exchanges; imposing tougher licensing requirements for those processing…

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