Novy Urges Congress To Address Potential Crypto Challenges

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Robert Novy, Deputy Assistant Director for the Office of Investigations of the US Secret Service, urged the Committee on Financial Services of the US House of Representatives last week to pay mind to the growing challenges in crypto that the world, including the US, is facing.

Criminal Use of Crypto

According to Novy, criminals prefer cryptocurrencies that have the following characteristics:

  1. Widespread adoption as a medium of exchange for intended criminal activities
  2. The greatest degree of anonymity.
  3. Protection against theft, fraud, and lawful seizure.
  4. Can be readily exchanged to and from their preferred currency.
  5. The ability to quickly and confidently transfer value transnationally.

Considering the aforementioned characteristics, Novy said that there are only a few cryptocurrencies that have been used for engaging in illicit activities. For example, others would use cryptos for purchasing illegal drugs and other contraband or criminal services. Others engaging in money laundering also prefer cryptos.

Blockchain and Digital Currency

Following the birth of Bitcoin, many individuals and groups created their own blockchain implementations, thereby offering more cryptocurrencies for the world to choose from. As of now, the largest cryptocurrencies by market capitalization are Bitcoin ($116 bln), Ethereum ($52 bln), Ripple ($22 bln), and Bitcoin Cash ($16 bln).

Novy told the Congress that there is a growing preference among various organizations in using blockchain for other purposes, including a decentralized public ledger for documenting who indeed owns a property, digital identity management, and supply chain management.

Call to Action

Toward the end of his speech, Novy said that “we should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools.”

However, he admitted that cryptocurrencies possess the potential to support more transparent and efficient global commerce, as well as to enhance US economic competitiveness.

Finally, Novy warned those who are using cryptos for their crimes, saying that “those that seek to further their illicit activities through [the] use of digital currencies should have no illusions that they are beyond the reach of the law.”

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