The FSB will soon issue the final version of recommendations
for regulating cryptoassets, he said.
"We're catching up to this innovation that's going so
quickly," Schindler added.
(Reporting by Huw Jones
Additional reporting by Elizabeth Howcroft
Editing by Alexander Smith and David Goodman
)
(Adds Financial Stability Board)
By Huw Jones
LONDON, April 25 (Reuters) - Anonymity is allowing
crypto assets to finance illegal activities, a top U.S.
regulatory official said on Tuesday, posing national security
risks that must be addressed.
Christy Goldsmith Romero, a commissioner at the U.S.
Commodity Futures Trading Commission, said cryptocurrencies were
being used to finance cybercrime with victimes including
individuals, companies, hospitals and critical infrastructure.
"Fraud is a hallmark of digital asset markets, the human
toll of which may be overlooked," Romero told a City Week
conference in London, adding that the lack of visibility in
cryptomarkets must be addressed.
"It's essential for governments and particularly the
industry to address that which makes crypto so attractive to
illicit finance, and that is the allure of anonymity," she said.
Legally compliant crypto companies should not be using
"mixers" or software tools that effectively anonymise users by
pooling and scrambling cryptocurrencies from thousands of
addresses.
"Congress is already considering new laws on addressing
anonymity and digital identity," Romero said.
Compliant crypto companies must show they have internal
controls to prevent money laundering and terrorist financing.
Last year the U.S. imposed sanctions on virtual currency
mixer Tornado Cash, alleging that it helped hackers, including
from North Korea, to launder proceeds from cyber crimes.
"It's possible for all crypto companies to distance
themselves from mixers and anonymity enhancing technology while
still providing customers financial privacy," Romero said.
Regulators in the United States, European Union, Britain and
elsewhere are trying to get their arms around crypto before
global norms are agreed and introduced for a borderless sector.
"As a result, different people are doing different things
and, yes, absolutely, firms are picking and choosing where to
set up shop," John Schindler, secretary general of the Financial
Stability Board (FSB), the G20's coordinator for financial
rules, told the conference.
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