Deputy Secretary of the Treasury Wally Adeyemo delivered a presentation today at the LINKS Conference by Chainalysis. Adeyemo outlined the risk and concerns that policymakers have when dealing with the burgeoning digital asset or cryptocurrency markets. While voicing his opinion on these risks, Adeyemo did note that it is important to encourage prudent financial innovation.
Adeyemo stated there are three risks that need to be managed:
- “First, there are issues of consumer and investor protection, working to make sure these assets are free from fraud and abuse.
- Then, there are issues related to financial stability, like ensuring that stablecoins are actually stable.
- And finally, there are national security concerns around anti-money laundering, terrorist financing, and ransomware.”
He then focused on the “security risk” and more specifically the ongoing ransomware issue and how criminals utilize crypto, highlighting several examples of crypto theft can cybercriminals.
“When we regulate, rather, it’s with an eye toward trying to foster innovation that creates economic opportunity and advances U.S. financial leadership while stamping out crime, abuse, and risks. We believe these goals go hand in hand with innovation.
We know that good data is critical to addressing these regulatory issues, and the US government does not have a monopoly on data in the cyber and crypto ecosystems. It is why we are investing in the public private partnership and it is why Chainalysis’ work is so critical. We must expand both our data ontologies and sources of data to match the new opportunities to leverage online and technical data footprints to drive attribution and identification of criminal actors.”
Adeyemo said that Treasury is excited about financial innovation, “when pursued responsibly.”
“If we are going to recognize that cryptocurrency and blockchain technology can be the heroes of stories about more efficient and affordable financial transactions, then we also have to recognize they can be an enabler and accelerant of crime in others. Cybercriminals almost always demand ransom payments in virtual currency and exploit vulnerabilities in the virtual currency sector to receive those payments. While ransom attacks of course existed before digital assets, it’s clear that these assets are a critical part of how ransomware has become such a pervasive threat. New technology is almost always susceptible to criminal use. The key question is what can we do to prevent the abuse of this technology?”
Adeyemo told industry participants not to wait for the Treasury to act but to police their platforms as much as possible. “Compliance cannot wait,” said Adeymo, “It must be present at the product launch and built into the fundamental architecture of your companies. I stress this point because I’ve seen what happens when it isn’t the case.”