Potential money launderers aren’t really using bitcoin – and of those who are, many are likely to move away from the cryptocurrency due to the fact every transaction is recorded and visible to all.
That’s one conclusion of a report published by the Crypto Council for Innovation, a new lobbying group hoping to inform and influence regulatory actions around the cryptocurrency sector. The report, penned by former Central Intelligence Agency Acting Director Michael Morell, is the first salvo in this effort.
"As more seizures and arrests are made, we believe illicit actors – who are technology agnostic – will continue to move away from using bitcoin for money-laundering purposes to other avenues that make it easier for them to hide their activities," the report said.
The council aims to “move the needle” in how governments approach crypto regulation, said Gus Coldebella, chief policy officer at Paradigm and one of the heads of the new organization, which was announced last week.
“We have a lot of policy makers who are becoming aware of crypto and at the same time might harbor some misconceptions about it,” said Coldebella, who’s also served in the U.S. Department of Homeland Security and was previously at Circle.
Morell, who was hired to produce the report through his consulting firm, Beacon Global Strategies, said he was interested in determining if the conventional wisdom – that bitcoin in particular is a major tool for money launderers – was objectively accurate.
In turn, he said he believes that the role bitcoin might play in illicit activities should determine how much attention is given to it, versus other national security issue like China developing its own sovereign digital currency.
“If we needed to be concerned about illicit finance and bitcoin, by all means let’s focus on that. But if conventional wisdom is not that accurate we should be going full steam ahead on competing,” he said.
The former longtime civil servant was joined by his colleagues Josh Kirshner and Thomas Schoenberger in producing the report, Morell said, though the conclusions remain his own. He doesn’t anticipate publishing anything else on the crypto industry specifically.
Joining a crowd
When asked why create an organization rather than join existing groups like the Blockchain Association or the Chamber for Digital Commerce, Coldebella said the new council wants to focus more on international regulations rather than the U.S. government.
Fidelity Digital Assets, Coinbase, Square and Paradigm are the organization's founding members.
“Crypto is, as you know, inherently borderless and it makes sense not just to address the policymakers in one country or one region, but across the world and if we are to be successful we should be doing those things, the education piece and the iterating with policymakers piece in a global, coordinated way,” Coldebella said.
As more and more people get involved in the crypto sector, it will draw increasing attention from different regulatory entities, he said.
He also noted it is important that the industry engages with the governments of the world because these governments will enforce regulations regardless.
“If we don’t engage with governments as an industry, then governments are still going to do what they’re going to do without the benefit of hearing from people who are literate in crypto and have been thinking about these issues for years,” he said.
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