Industry News US Department Of Justice issues a Warning on Malicious Cryptocurrency Use

US Department Of Justice issues a Warning on Malicious Cryptocurrency Use

October 13, 2020

Another stark report on cryptocurrencies has just been published by a major US government body. The US Department of Justice warned that the ascendance of cryptocurrencies and bitcoin as its biggest individual player is a threat to national security. More precisely, the Cyber-Digital Taskforce, set up by the attorney general William Barr, stated that the same process could be an ongoing storm.

Right now, the US is seeing the first drops of the same downpour, but that there is little doubt that it is coming. The warning is serious-sounding, but like so often in the case of cryptocurrencies-meet-governments, it provides little context and direct forecasts, beyond the doom and gloom of a potential future.

But, despite this, it is still a valuable insight into the workings of a government that is a major economic and financial power. At the same time, it is also a country where the landscape of users and services in the crypto domain is quickly evolving and changing, often too fast for the traditional market to keep track of it. However, it appears that the Department of Justice at least is trying to follow up on the malicious and criminal uses of cryptocurrency across the world, but in particular in regards to the US.

Use of Bitcoin

There’s no doubt that bitcoin and cryptocurrencies in general are employed by rogue nations, terrorists, and many other criminal or malicious groups. Their use likely mirrors that of the general population, with the adoption rates constantly growing even in this domain. Also, the reason for their use is clear as well. These groups employ BTC to undertake money laundering and tax evasion when it comes to more white-collar criminal ventures.

More nefarious activities cover things like extortion where cyber-focused outfits use BTC as the means of payment in the event of hijack malware and ransomware attacks. In recent years these attacks have been widely documented and some of them, like the one that recently took place on Twitter, even made headline news. So so it is absolutely pointless to argue with the assessment of the US Department of Justice that cryptocurrencies are indeed used by many nefarious players on the global stage.

Rogue Nations

Besides the criminal element, the report from the US agency also played a big emphasis on the existence of cryptocurrencies inside of rogue nations. It states that many nations that are operating outside of the regular and agreed international rulesets use cryptocurrencies to great extent. While these are not named, there is no doubt that the report most likely references countries like Iran, Venezuela, and North Korea. Here the use of cryptocurrencies varies widely. That is why for example in Venezuela the use of digital currencies like Dash is a reflection of an unstable central government and its banking system.

In this country, people are using cryptocurrencies because their basic fiat one is practically useless. In Iran, on the other hand, the use of cryptocurrencies is something that the government is actively trying to regulate. Because of this, the nation, even recognized bitcoin mining and cryptocurrency rig operation in general as a viable and government-regulated industry. Lastly, in North Korea, there is also documented use of bitcoin, but it is not hard to say what is its connection with the government or the general population, which most likely does not use any cryptocurrency tokens.

Threat to Stability

From the position of listing all the potentially dangerous and problems of cryptocurrency news, the US Department of Justice report concludes that all of these represent a big problem for the safety and stability of the wider international financial system. The same applies to the system that the US uses for its own financial dealings. The agency reported that its expiration was also hampered by the inconsistent regulations and rules, differing from one country to the other. That problem is apparent not just in the underdeveloped nations, but also in many EU countries or places like Japan.

Between them and the US, there is a huge divide in the difference in the government’s approach to recognizing and regulating the instances of using cryptocurrencies. The same applies in equal measure to individual citizens who might be interested in having or trading in cryptocurrencies, but also to big companies and even multinational entities that could be looking to diversify their fiat money holdings into different forms of value. Today along with gold, stocks, and bonds, bitcoin is also one of the options that these companies have at their disposal. The US Department of Justice found out that in some places, for example in Japan, companies can easily buy cryptocurrency and store it on their official digital wallets.

Blockchain Flattery and Cryptocurrency Hesitation

Wiliam Barr gave his assessment along with the report that his agency produced. He said that, like many other advanced technologies including esports, social media, and streaming services, walking around has a chance to transform the very fundamental elements of global financial interactions. However, for that to happen the same technology needs to offer a safe and secure means of attaining the same interactions.

Right now, Barr believes that the bitcoin ecosystem is simply inhabited by too many malicious parties for it to be available on any official level. Furthermore, the presence of these parties is also a direct threat to the US security on a national level. Once again the problem that arises from this kind of mentality and approach to cryptocurrency is one of systematic failure. In other words, where is the exact moment where bitcoin allows criminals, terrorists, and rogue nations to use it in a different way than any other means of storing value they might have at their disposal?

After all, the number one fiat currency that is employed by all these people is still the USD in its paper form. In comparison to the US dollar, bitcoin still has a long way to go before it becomes the currency of choice for any illegal group. So, with that, the problem once again is not about the inherent characteristics of bitcoin, but how to regulate the same cryptocurrency so that ordinal users can be protected while they get its benefits at the same time.

Source: Forbes