U.S. Deputy Attorney General Tells INTERPOL They Must Slow the Growth of Cryptocurrencies

Derrick Broze

On Sunday, U.S. Deputy Attorney General Rod Rosenstein spoke to the 87th Interpol General Assembly in Dubai.

The International Criminal Police Organization, or Interpol, is the international organization that facilitates international police cooperation.

The theme of the assembly was “innovation” and Mr. Rosenstein focused on the digital innovations which affect law enforcement and contribute to a rise in cybercrime.

Rosenstein opted to speak about Interpol’s role in responding to the rise of “cyber-connected world” and the opportunities for criminals to exploit technology like the Internet, cryptocurrencies, and encryption. “Today, there is a growing divergence between the Internet as it is, and the Internet as it could be,” Rosenstein stated during his talk. “Malicious actors use the Internet for evil ends.  Cyber criminals employ modern technologies to damage information systems, steal data, commit fraud, violate privacy, attack critical infrastructure, and sexually exploit children.”

The Deputy Attorney General also called attention to bad actors who “launch misleading schemes to influence people’s opinions” and attempt to “foment division and disrupt democratic processes”. He also called for international cooperation to establish the rule of law on the internet.

Rosenstein singled out cryptocurrencies as a tool used by cybercriminals and said regulating, seizing, and tracing cryptocurrencies “demand a multinational response”.

“We must not allow cybercriminals to hide behind cryptocurrencies,” Rosenstein said at the 87th Interpol General Assembly. “Virtual currencies have some legitimate uses.  But bad actors are using them to fund crimes and to hide illicit proceeds.” Rosenstein noted that Bitcoin was the exclusive method of payment for the WannaCry ransomware attack which caused billions of dollars in losses. He also warned about “fraudsters” using cryptocurrency to promote scams and engage in market manipulation.

Blockchain and the Rule of Law

“We must work together to make clear that the rule of law can reach the entire blockchain,” Rosenstein stated. He noted that prosecutors in the U.S. had arrested Alexander Vinnick, operator of BTC-e, a cryptocurrency exchange, for alleged money laundering schemes. Vinnick faced criminal charges and a $12 million civil penalty. “To prevent virtual currency from being abused by criminals, terrorist financiers, or sanctions evaders, all of us must implement policies that mitigate the risks posed by the new technology,” Rosenstein told the room full of law enforcement officials. 

Mr. Rosenstein also spent a moment to discuss the potential for abuses of encrypted communications. Although he acknowledged the value and benefits of encryption, Rosenstein noted that the growth of “warrant-proof encryption” poses a challenge to law enforcement.

“Encryption technologies designed to be impervious to legal process impede our ability to access investigative data,” Rosenstein said. He called for continued work with technology companies to develop responsible practices for encryption.

IRS to Host Summit to Discuss its Cryptocurrency Taxing Approach With Crypto Firms

The U.S. Internal Revenue Service (IRS) has reportedly invited a number of cryptocurrency startups to a summit that’s set to be held on March 3.

In the event, which was first reported on by Bloomberg Tax, the agency will reportedly discuss with cryptocurrency firms how  it can “balance taxpayer service with regulatory enforcement.” The summit will include four 90-minute panels on technology, issues for crypto exchanges, tax return preparation, and regulatory guidance and compliance.

According to CoinDesk, an IRS spokesperson confirmed the summit is indeed taking place. Speaking to the publication Kristin Smith, executive director of the Blockchain Association advocacy group, said the agency has been looking to set up an event since at least last month. She added:

My understanding of the event is this is going to be something where the IRS is going to use this as an opportunity to learn from [participants] in the ecosystem but [it] may help inform IRS’s thinking.

The summit will be held at the IRS’s Washington, D.C. headquarters, and it’s worth pointing out the agency hasn’t explicitly said knowledge it gets from it will be used in its future guidance.

The development comes shortly after the Government Accountability Office (GAO), a U.S: Congress watchdog, published a report evaluating the IRS’s existing approach to cryptocurrencies. It noted the agency declined to adopt some recommendations that would help clarify its existing guidance.

Last year, the IRS released an update to their 2014 cryptocurrency tax guidelines, adding to it more control over capital gains, addressing hard forks, and more. The guidelines, however, raised questions when it came to airdropped cryptoassets, and didn’t address small transactions.

Featured image via Pixabay.