According to a report recently delivered to the Biden administration, crypto regulation in the US should be strengthened.
This is a new framework proposed by the Ransomware Task Force (RTF) for combating ransomware, i.e. cryptocurrency ransom demands resulting from hacking attacks.
The Ransomware Task Force is a US-led team, created in early 2021 together with other governments, software companies, cybersecurity vendors, academic institutions and non-profits from around the world.
The purpose of the RTF is precisely to develop a strategy to address the ransomware threat globally, deterring hackers, and helping to ensure that various organizations are equipped to prepare for and respond to such attacks.
The RTF’s final report submitted to the US government, is titled “Combating Ransomware”, and includes 48 recommendations, some of which aim to strengthen cryptocurrency regulation, to reduce the damage caused by ransomware attacks.
It explicitly states:
“The cryptocurrency sector that enables ransomware crime should be more closely regulated”.
Indeed, according to this report, ransomware payments are generally made in cryptocurrency itself, and are difficult to trace.
In this regard, one of the 48 recommendations calls for the cryptocurrency industry to be more tightly regulated, such that governments should require crypto exchanges and OTC desks to comply with existing Know Your Customer (KYC), Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) laws.
To be fair, the vast majority of large centralized exchanges already do this, so while the RTF’s research may have uncovered little or no known information, it does denote a perhaps not particularly thorough knowledge of the real crypto sector.
Moreover, given that there is no real way to enforce compliance with these rules on exchanges that are truly decentralized, it is hard to imagine what significant advantages could be gained by increasing restrictions on cryptocurrency exchanges.
In South Korea, for example, this has already been done for some time, but it does not seem to have had much impact on the local crypto sector.
Other recommendations, however, appear less unrealistic, such as developing new tools for the voluntary sharing of cryptocurrency payment indicators, or encouraging voluntary information sharing between crypto entities and law enforcement, or centralizing responsibility for cryptocurrency seizures around the world.
The RTF report also points out that hackers use mixing services to obscure their transactions, and sometimes request payment in untraceable cryptocurrencies, such as Monero. With regard to these factors, it must be said, there is little that can be done in practice.
In other words, it is difficult to see how the Biden administration could actually go about tightening regulation of the cryptocurrency sector in order to discourage ransomware, while it is unfortunately much easier to imagine what it could do to impose unnecessary strings attached that could hinder the growth of this industry.