The Justice Department’s Digital Working Group recently released the results of its months-long efforts to assess emerging threats to cryptocurrency and develop law enforcement strategies to combat them. The guidance received gives the reader the impression that the authors have a solid understanding of how the most important asset class works, as well as a specific fixation on abuse, some observers say.
In the extremely tense atmosphere of recent weeks leading up to the presidential election, with high-profile law enforcement action against the people behind the crypto derivatives exchange BitMEX, and anti-monopoly pressure from the US government on Silicon Valley, the concept of cryptocurrency adoption seems to be part of a larger political and organizational dynamic. How does document publishing fit into the overall scheme of things, and what message should it convey?
Timing and context
One of the reasons that even a modest increase in law enforcement in the digital asset space seems like a complete failure is because US government agencies have so far been quite selective in their decisions to prosecute unscrupulous crypto actors.
The lack of specific rules, as well as the notorious confusion as to which regulator it is in charge of, has left the general strategy of intervention only for the prosecution of the most serious cases and not for full enforcement. The Ministry of Justice’s submission of a coding enforcement system may indicate that the situation is changing.
Andrew Hinks, co-founder of Athena Blockchain, consultant and lawyer at law firm Carlton Fields, argues that the report is mainly a summary of law enforcement efforts in the blockchain industry over the past six years, but the report points to a clear upward trend. :
Various federal agencies mentioned in the report, such as the SEC, CFTC and FinCEN, are regularly increasing their cryptocurrency regulatory and enforcement activities as this space grows. Most of the report collects and describes the actions of various agencies in recent years. ”
Barry Boss, co-chair of commercial litigation at law firm Cozen O’Connor, noted that the DOJ has so far “been fairly easy” to comply with day-to-day regulatory requirements, and it can take a long time to understand the market as it develops.
It seems unlikely that the publication of the current implementation guide was timed to coincide with any particular developments in the cryptocurrency market, as the detailed 83-page report took several months.
Speaking of the overall political moment, Arlo Devlin-Brown, partner of Covington and Beurling at White Collar Law & Investigations, notes that cryptocurrency enforcement is far from one of the hot topics in the 2020 presidential election:
“I suspect this working group, like other Justice Department task forces, is trying to complete the pending reports before a possible change of administration in January. However, I do not think that this issue is particularly relevant for electoral politics, and I do not expect major changes in the priorities of the use of cryptocurrency in the Ministry of Justice in the event of Biden’s victory in the presidential election. ”
The guidance document outlines the DOJ’s priorities and strategies for the mature digital currency industry, which aims to inform police, market players and the general public at home and abroad. In addition, some parts of the report can be seen as an indication of what certain sub-groups of cryptocurrency stakeholders can expect in the future.
The boss told Cointelegraph that the new rules imply the Justice Department’s desire to strengthen law enforcement. In his opinion, the report is intended to inform the cryptocurrency community. This time it will be not only the most impudent criminals:
<< There have been many studies that have shown that large amounts of terrorist financing, money laundering and other illicit proceeds are channeled through the existing major stock exchanges. The DOJ has made it clear in its work that they are aware of this issue and that enforcement of federal criminal laws, including Know Your Customer and Anti-Money Laundering requirements, is part of the system to address this issue.