CFTC commissioner Christy Goldsmith Romero believes the prevalent anonymity in crypto is a national security risk as it allows criminals to use digital assets for illicit purposes, Reuters reported.
Romero made the comments during the City Week conference in London on April 25.
Romero told the conference that crypto has become very “attractive” for illicit finance due to the “allure” of anonymity.
She added that digital assets are increasingly used to commit cybercrime — often with no repercussions for the perpetrators, as anonymity allows these criminals to hide their trails. She said the victims of these cybercrimes are often critical infrastructure or public sector facilities like schools and hospitals.
“Fraud is a hallmark of digital asset markets, the human toll of which may be overlooked.”
She called on governments and the crypto industry to do more to combat the illicit financial activity done via crypto and ensure that digital assets are not synonymous with fraud and criminal activity.
Romero said the main way to do this is by addressing digital identity and anonymity in the industry. She added:
“Congress is already considering new laws on addressing anonymity and digital identity.”
One of the main points of concern Romero raised during her talk was around the use of crypto mixers like Tornado Cash to anonymize transactions.
She said that crypto companies that are compliant with regulation should not be allowed to use mixers or any anonymizing technology as it is the primary tool used in money laundering and terrorism financing.
Tornado Cash was sanctioned by the U.S. government in 2022 after reports revealed that hackers and other criminals had been using it to launder stolen funds. Some of the hackers were found to be linked to the Lazarus Group — a North Korean state-sponsored group of hackers that use cybercrime to fund the country’s defense programs.
Romero added that crypto companies must show that they have internal controls in place to ensure their services are not used for money laundering or other illicit financial activity. She said:
“It’s possible for all crypto companies to distance themselves from mixers and anonymity enhancing technology while still providing customers financial privacy.”
The post CFTC official says anonymity in crypto is a national security risk appeared first on CryptoSlate.