U.S. Secret Service calls on Congress for regulatory actions on Privacy Coins
Late last week, Robert Novy – deputy assistant director for the Secret Service’s Office of Investigations – spoke with the U.S. House of Representatives Committee on Financial Services to push for congressional action against privacy based cryptocurrencies.
Novy also pushed for regulation on services and websites that may additionally aid the distortion or anonymity of a digital transaction.
In Novy’s published testimony, he called on Congress to “consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools.”
No specific privacy coins were mentioned by name, however we have seen projects like Monero and Z-Cash receive harsh regulatory sanctions from other countries already this year.
In late May, the Japanese Financial Security Agency announced that on June 18, all privacy based coins will be outright banned. Following this announcement, we saw projects like Monero and Z-Cash be delisted from all of the countries cryptoasset exchanges.
Privacy coins allow their users to keep a strong basis of financial privacy and are among some of the most popular cryptocurrencies in the space.
Although to regulators, these projects have become a huge headache as their anonymity is often leveraged by criminals. Things like tax evasion, or drug trafficking are hard to track when they are executed through fully anonymous cryptocurrencies.
Novy also tried to emphasize this struggle that law enforcement has faced when dealing with anonymous cryptocurrencies. “Congressional attention is warranted to ensure law enforcement, regardless of where, or in what form, that information is stored,” he stated as he tried to convey the need for congressional regulation.
It is still unclear if Congress will take action against these types of anonymous cryptocurrencies. However, as the cryptoasset space continues to grow, regulation will be a key part of its development and implementation to everyday life.