WASHINGTON—The undersecretary of the U.S. Treasury's Office of Terrorism and Financial Intelligence is calling on the international community to develop stronger cryptocurrency regulations to help protect the financial system and national security.
Citing Venezuela's recent introduction of the "petro" cryptocurrency as an example, Sigal Mandelker told the Securities Industry and Financial Markets Association Anti-Money Laundering and Financial Crimes Conference that rogue regimes, terrorists and others use cryptocurrencies to "exploit the financial system," "hide their ill-gotten gains" and "finance their illicit activities," CoinDesk reported.
Mandelker went on to say that there is a lack of consistent international regulation of cryptocurrency "providers" with regard to anti-money laundering (AML) and combatting the financing of terrorism (CFT).
"The lack of AML/CFT regulation of virtual currency providers worldwide greatly exacerbates virtual currency's illicit financing risks,” said Mandelker, according to CoinDesk. “Currently, we are one of the only major countries in the world, along with Japan and Australia, that regulate these activities for AML/CFT purposes. But we need many more countries to follow suit, and have made this a priority in our international outreach."
Mandelker further cautioned that a $110-million penalty levied at cryptocurrency exchange BTC-e last year for failing to register as a money transmitter was indicative of the Treasury's expectations and willingness to aggressively enforce regulation, CoinDesk reported.