The U.S. Treasury Department has asked the public – including the crypto community – to comment on how digital assets might be used in illicit activities, and what the department should do about it with regards to regulation.
The Treasury published a questionnaire in the Federal Register on 20 September inviting interested members of the public to provide input pursuant to President Joe Biden’s Executive Order of March 9, 2022, “Ensuring Responsible Development of Digital Assets”.
“These illicit activities (money laundering, terrorist and proliferation financing, fraud and theft schemes, and corruption) highlight the need for ongoing scrutiny of the users of digital assets”
The Executive also calls for inter-departmental coordination in drafting an action plan based on the strategy’s conclusions, addressing the role of law enforcement and measures to improve financial services provider’s compliance with anti-money laundering and countering the financing of terrorism obligations related to digital asset activities.
The request for comment aims to help authorities understand the public’s view on the emerging risk and actions to be taken to mitigate the risks. It also touches upon illicit finance risks, anti-money laundering and counter terrorism financing regulations, feasiility of public-private collaborations and Central Bank Digital Currencies (CBDCs).
The Treasury has been speculated that it would advise the federal government to move forward with plans to issue the digital dollar if it was in the national interest, and whether statutory reform would be needed to authorize the Federal Reserve to create a CBDC. The request for comment goes one step further by asking how the Treasury could incorporate counter terrorism financing and anti-money laundering controls into a future CBDC.
The U.S. government has taken a scrutinizing approach to crypto, previously banning Tornado Cash, a coin mixer used to anonymize Ethereum Transactions.
While the request for comment highlights potential risks, Treasury Secretary Janet Yellen also pointed to significant opportunities in the crypto space in Friday’s update.