France’s National Assembly Finance Committee has released a report on cryptocurrency assets and blockchain technology. Within the report Éric Woerth – the committee’s president – proposes that it would be necessary to ban activity relating to cryptocurrencies whose architecture obscures the identity of users, allowing transactional anonymity.
Challenges Created by Cryptocurrencies
Woerth discusses the legislative challenges faced by regulators in understanding and mitigating the perceived financial threats from cryptocurrencies.
“We must be aware of the problems that [cryptocurrencies] can pose in terms of fraud, tax evasion, money laundering or fraud, or energy consumption,”
“It would also have been appropriate to propose a ban on the dissemination and trade in [cryptocurrencies built] to ensure complete anonymity by preventing any identification procedure by design,” Woerth adds. “This is the case for a certain number of [cryptocurrencies] whose purpose is to bypass any possibility of identifying the holders. To date, regulation has not gone that far.”
Rhetoric insinuating the enabling of illegality from anonymous digital assets will grate with cryptocurrency advocates (and those still affected by the 2008 subprime crash). Time and time again legislators and legacy financiers have voiced their ‘concerns’ surrounding the supposed illicit and illegal transactions encouraged by cryptocurrency use. Warren Buffett even went so far as to describe Bitcoin as ‘Rat Poison Squared’. However, as many in the cryptocurrency industry have pointed out, cash and the ultimate anonymity it provides is still king of crime.
Recent news stories of European banks drawn in to money-laundering allegations (including Danske Bank A/S, Swedbank AB and Nordea Bank Abp) have hit headlines. The International Monetary Fund estimates that 5 percent of global GDP, that’s $2 trillion, is laundered every year. And yet these money-laundering crimes are being committed by the very institutions who are quick to denounce the perils of anonymous cryptocurrencies – ‘protecting’ the public from crime.
Interestingly, Woerth’s comments do not extend to the wider cryptocurrency ecosystem, suggesting a potential future compromise.
“The distinction between the different uses of [cryptocurrencies] must continue, to establish a finer and more precise regulation protector of the general interest, as well as the private interest of the entrepreneurs of this domain,” writes Woerth.
Indeed – many in the industry believe that we are past the ‘pandora’s box’ moment – and are therefore witnessing existing legacy institutions coming to terms with this brave, new digital world.