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Crypto Ransomware Epidemic Attracts Potential Financial Regulatory Clampdown

2 mins
Updated by Kyle Baird
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In Brief

  • U.S. Dept. of Justice has created a panel dedicated to regulating cryptocurrency and fighting ransomware.
  • New proposed regulations hope to remove anonymity from cryptocurrency transactions.
  • Cybercrime, including ransomware, is expected to turn over $6 trillion in damages in 2021.
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A panel consisting of government officials and crypto industry experts is expected to call for more aggressive regulation on bitcoin (BTC) and other cryptocurrencies. This is in light of the growing prevalence of ransomware attacks.

Reports have stated that, while many cryptocurrencies have earned the respect of investors, they are also a breeding ground for cybercriminals. This includes those utilizing ransomware to carry out their crimes. As such, members of the special task force believe cryptocurrency regulation is the key to nipping the ransomware problem in the bud.

Some have speculated they expect cybercrime damages, including those from ransomware, to hit $6 trillion in 2021. 

Last week, the U.S. Department of Justice (DoJ) established a group dedicated to confronting the ransomware epidemic. Meanwhile, bank regulators and investigators of financial crime from across the world are discussing cryptocurrency regulation. If it’s necessary, and, if so, how do they regulate it?

What is the task force proposing?

Reports indicate that the panel has proposed a new set of rules, which center around removing anonymity from crypto transactions. It’s this anonymity that, the task force believes, steers people towards cryptocurrency. Shielding them from governments’ monitoring of their individual financial activities. 

The panel hopes that removing the anonymity will deter people away from using cryptocurrencies for criminal activity.

More specifically, the task force recommended steps such as:

  • Extending “Know Your Customer” protocols to currency exchanges.
  • Implementing more aggressive licensing requirements on crypto processors.
  • Implementing further anti-money laundering regulations at services such as currency conversion desks.

Furthermore, the panel stated their wishes to create a team of experts within the DoJ. This team, it’s hoped, will specialize in seizing cryptocurrency.

Other crackdowns on illegal crypto transactions

The U.S. are not the first to instigate a harder attitude towards illegal crypto transactions this month. In a bid to eliminate cryptocurrencies’ use in money laundering and other financial crime, South Korean officials announced a crackdown, scheduled to continue until June. 

Like the U.S.’s panel, the South Korean motion involves a number of agencies and regulators. Their crackdown also introduces a number of strict regulations to help these agencies track suspicious transactions. It, in turn, followed from an earlier law imposed to force VASPs to verify their users’ identities.

Under South Korea’s new regulations, exchanges that fail to report suspicious activity will face fines.

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Dale Hurst
Dale Hurst is a journalist, presenter, and novelist. Before joining the Be In Crypto team, he was an editor and senior journalist at a news, lifestyle and human-interest magazine in the UK. Cryptocurrency was one of the first subjects he specialized in when first going freelance in 2018, reviewing exchanges and analysing lawsuits.
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