Authorities and business push bitcoin regulation to combat ransomware

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Government and industry officials faced with a ransomware epidemic in which hackers freeze a target’s computers and demand a payout are turning to cryptocurrency regulation as the key to fighting the scourge, according to sources linked to the work of a public- private task force.

In a report on Thursday, the panel of experts is expected to call for a far more aggressive pursuit of Bitcoin and other cryptocurrencies. While these have gained greater acceptance with investors over the past year, they remain the lifeblood of ransomware operators and other criminals with little risk of law enforcement in much of the world.

Ransomware gangs raised nearly $ 350 million last year, three times more than in 2019, two task force members wrote this week. Corporations, government agencies, hospitals, and school systems are among the victims of ransomware groups, some of which are on friendly terms with nation-states such as North Korea and Russia, according to US officials.

“Much more can be done to curb the misuse of these amazing technologies,” said Philip Reiner, executive director of the Institute for Security and Technology, who led the Ransomware Task Force. He declined to comment on the report before it was published.

Just a week ago, the US Department of Justice founded a government group on ransomware. Central bank regulators and financial crime investigators around the world are also debating whether and how cryptocurrencies should be regulated.

The new rules proposed by the public-private panel, some of which would require action by Congress, are primarily aimed at penetrating the anonymity of cryptocurrency transactions, the sources said. If implemented, they could mitigate the excitement of those who see cryptocurrencies as a refuge from national monetary policy and government control over the financial activities of individuals after reaching a total capitalization of over $ 1 trillion.

The task force consisted of representatives from the FBI and the United States Secret Service, as well as large technology and security companies. Steps are recommended such as: B. the extension of the “know-your-customer” rules to currency exchange; Impose stricter licensing requirements on those who process cryptocurrency; Extension of the money laundering rules to facilities such as kiosks for currency conversion.

It also calls for the creation of a dedicated team of experts within the Justice Department to facilitate cryptocurrency seizure, a process that is currently fraught with logistical and legal challenges.

Some of the ideas are similar to those of the Financial Crimes Enforcement Network, which would expand disclosure rules for transactions valued at more than $ 10,000.

Federal investigators said a proposal to register accounts would be particularly helpful in identifying drug smugglers, human traffickers and terrorists, as well as ransomware groups.

“That would be huge,” said a senior Homeland Security official, who spoke on condition of anonymity to discuss emerging policy proposals. “This is a world that was designed to be anonymous, but at some point you have to give up something to make sure everyone is safe.”

Governments are already using the blockchain ledger, which documents all Bitcoin transactions, to collect fees. Last week, authorities arrested a man in Los Angeles, accusing him of laundering more than $ 300 million through a service that combines transactions from multiple cryptocurrency wallets to hide who is paying whom.

Records from the US Marshals Service show that more than $ 150 million in crypto assets were confiscated and offered to the public at auction last year. Last week, the Marshals Service signed a $ 4.5 million contract with BitGo, a California-based exchange, to hold and sell more forfeited cryptocurrency.

However, many of the exchanges that perform the critical operation of converting cryptocurrency to dollars or other widely accepted currencies are located in countries beyond the reach of US regulators.

Reiner, of the Institute for Security and Technology, said international cooperation will be vital and that allies with similar regulations could apply pressure, which could help fuel exchanges in countries where Americans will be reluctant to send their funds .

“As many crypto markets believe they have built their own networks, they still rely on existing financial markets,” said Reiner.

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