Apr 28, 2023
CFTC Commissioner Proposes Reducing Crypto Anonymity to Combat Illicit Finance
The United States Commodity Futures Trading Commission (CFTC) Commissioner, Christy Goldsmith Romero, has recently proposed reducing the anonymity of cryptocurrencies as a means of controlling the risks associated with digital assets. Her suggestion was made during the keynote speech at City Week 2023 in London, on April 25, which focused on Illicit Finance and Other Key Risks of Digital Finance.
Romero highlighted the importance of governments and the industry tackling the primary feature that makes cryptocurrencies appealing to illicit finance — anonymity. She stated that the risks associated with digital assets must be managed, as market integrity, national security and financial stability are of utmost importance and cannot be compromised.
Reducing the risks of illicit finance in the cryptocurrency market requires identity verification, Romero said. Although the public blockchain offers some transparency and traceability, the use of mixers and anonymity-enhancing technology increases the potential for substantial risk, she added.
A crypto mixer is a service that blends the cryptocurrencies of many users together to confuse the origins and owners of the funds. Because Bitcoin, Ethereum, and most other public blockchains are transparent, this level of privacy is otherwise hard to achieve.
Romero pointed out that two mixers — Blender and Tornado Cash — were recently sanctioned by the United States Treasury Department. Tornado Cash was allegedly involved in laundering $7 billion, including millions of dollars stolen by Lazarus Group, a North Korean state-sponsored hacking group that has been involved in cyberattacks to aid illicit nuclear and ballistic missile programs.
The commissioner encouraged the verification of digital identity, urging exchanges as well as decentralized finance (DeFi) platforms to verify the digital identity of users. She mentioned that, more often than not, DeFi services are not fully decentralized but instead maintained by central parties who could verify identities and may be held accountable for doing so.
Romero further discussed existing technologies to provide digital identity and those being developed. She noted that Congress is also considering new laws addressing anonymity and digital identity. The U.S. government will continue to prioritize preventing crypto’s use for illicit finance.
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Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.
