On October 8, The United States Department of Justice (DOJ) released an enforcement framework report on cryptocurrency, which reveals how officials plan to deal with future regulation in the industry.
The report is structured in three separate parts, each one describing the difficulties of how certain blockchain illicit activities could cause harm to the public. The first part reviews financial transactions for commissioned crimes, money laundering and shielding from tax reporting, and hacks or theft of digital assets, while the second and third explore various enforcement tools that could be used to prevent such crimes.
According to the researchers, the growing DeFi space requires increased regulation as today’s activity in the sphere is steadily growing.
“Even in societies where transformative scientific and technological advancements are achievable, public policy again plays a critical mediating role. In the wrong hands, or without appropriate safeguards and oversight, these advancements can facilitate great human suffering,” the report says.
And while the report acknowledges the potential of cryptocurrency and blockchain technology and its growing adoption, officials expressed their caution of possible security threats. They urge members of the industry to work together with regulators in order to find common grounds on which to further develop this technology without endangering public safety.
“To promote public safety and protect national security, all stakeholders – from private industry to regulators, elected officials, and individual cryptocurrency users – will need to take steps to ensure cryptocurrency is not used as a platform for illegality. Indeed, for cryptocurrency to realize its truly transformative potential, it is imperative that these risks be addressed.”
The report also brings up the question of whether cryptocurrencies should be viewed as a type of virtual currencies as they are based on blockchains and decentralization and do not directly represent value.
Probably the topic which is surrounded by the most controversy is the issue of the rising criminal activity that may involve crypto. This topic ranges from questionable ICOs to the funding of anti-government organizations that promote violence on a global scale.
“Innovations in technology often change the world for the better. And yet, criminals, terrorists, and rogue states can use those same innovations for their own illegitimate ends, imposing great costs on the public. Today, few technologies are more potentially transformative and disruptive – and more potentially susceptible to abuse – than cryptocurrency,” researchers further implied.
And while the Securities and Exchange Commission (SEC) is actively working towards regulating the crypto sector, if put into action, the Enforcement Framework can set clearer rules for the adoption of blockchain and ensure that investors are protected to trade digital assets in safe conditions.