Will US lawmakers bungle the burgeoning blockchain industry by amending a 50-year-old law so it covers cryptocurrency transactions? Rumblings around Capitol Hill suggest they might.
Despite naysayers’ skepticism, the cryptocurrency market continues to thrive. But growth breeds both good and bad outcomes. Yes, some people see the legitimate potential of a decentralized, international banking system; but others are exploiting the environment to prop up illegal trafficking operations and fraud schemes.
Concern over crypto swindles, plus a desire for more tax revenue, has sparked debate among legislators who are considering if and how to regulate digital token initiatives. Throwing his opinion in the ring, the vice president of the Financial Integrity Network, David Murray, suggested that lawmakers “strengthen cryptocurrency regulations by creating a new class of financial institution: virtual asset transaction validators.”
People like Murray want to impede criminals’ attempts to leverage blockchain technology for mischief. And lately, the movement has people wondering if policymakers will update the Bank Secrecy Act to cover cryptocurrencies.
What is the Bank Secrecy Act?
Federal legislators ratified the Bank Secrecy Act 50 years ago. Its primary purpose is to mitigate money laundering. In recent months, industry watchers have indicated that U.S. politicians are considering extending the law to include cryptocurrency transactions.
What Would Happen if the Bank Secrecy Act Covered Cryptocurrencies?
There’s a common misconception that token transactions are 100% anonymous. Not true. Yes: They’re more challenging to track than fiat exchanges; but it’s still possible. And if officials pass an amendment to the Bank Secrecy Act, token transactions will become less private because the feds would require wallets and exchanges to report suspicious activity. The dictate would likely spawn advancements in crypto-transaction tracking software, pushing the community further away from its original intentions.
Regulating Miners is a Colossally Bad Idea
Chatter is also rumbling about the possibility of regulating miners — a terrible idea that could Hindenberg the crypto market. Miners are scattered throughout the world, and trying to monitor international activity in such a way would inevitably lead to political and regulatory catastrophes. Besides, miners don’t have a choice in which transactions their systems validate.
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