Washington DC-based advisory firm, Financial Integrity Network (FIN) has become to latest to call on U.S lawmakers to create strong regulations around the use of cryptocurrencies in the country.
FIN made this call in a testimony published ahead of a Sept 3 Congress hearing, requesting that virtual asset service providers (VASPs) come under the U.S Bank Secrecy Act (BSA), a regulatory framework that governs most financial institutions.
Writing in the testimony, FIN’s VP for product development, David Murray highlights the negative ways that human traffickers can use cryptocurrencies to boycott existing regulatory efforts to stop them from conducting their illegal trades.
For instance, he stated that “purchasers of sex may also use cryptocurrencies to pay for premium memberships on websites that they use to review services.”
To combat the growing trend, he recommended that Congress strengthens cryptocurrency regulations by creating a new class of financial institutions under the Bank Secrecy Act. These institutions should be called virtual asset transaction validators as per Murray’s proposal and should come under systemwide financial crimes compliance governance.
Murray further noted that while some VASPs are currently regulated as money transmitters under the BSA, others are not regulated at all. Even for those VASPs currently regulated as money transmitters, he argued that the regulations are insufficient to prevent the use of cryptocurrencies for illicit activities.
Granted, the FIN official expressed his knowledge that enforcing the regulation he is proposing for the crypto industry will “make it difficult for some existing implementations of blockchain-based payments to continue operating as they do today.”
However, he concluded that the BSA or the global financial transparency regime is not on a mission to enable or accommodate all manner of financial products and services, regardless of the threat that they pose to financial transparency.
Meanwhile, Murray’s call for strong U.S crypto regulation comes amid ongoing efforts by the Financial Action Task Force (FATF) to bring the industry under its control. In June Stmarket.co reported that the international organization finally approved its long-awaited guidance for crypto platforms.