The issue of regulating crypto is by all means a complex problem. However, one US official feels he has found an appropriate solution to the crypto imbroglio.
Michael Pompeo, US Secretary of State, described his proposal for crypto regulation in an interview with CNBC on Tuesday.
When asked what he considers the best way to regulate Facebook’s Libra or Bitcoin, Pompeo responded:
My sense is this: We should use the same framework that we use to regulate all other electronic financial transactions today. That’s essentially what these are. These are monies moving through markets, or in some case disintermediated transactions.
Pompeo explained further, emphasizing his belief that all financial transactions should be handled in a similar manner, whether fiat or crypto:
The same rules that apply to transactions flowing through SWIFT or flowing through our financial institutions ought to apply to those transactions as well. I concede it will be difficult to do, but the regulatory theory that we ought to apply is that one.
The interviewer also mentioned that Bitcoin is already “out of the bag”, obfuscating the path to regulation with preexisting infrastructure for the token.
The discussion with CNBC’s Squawk Box covered a variety of worldly issues, including the Hong Kong protests and state-run propaganda harnessing social media. Pompeo also addressed the role cryptocurrencies play in both the funding of terrorism and money laundering.
Late to the stage, terrorist groups have begun to use crypto to secure funding, amidst a market of those already harnessing crypto for illicit purposes. Recently, Palestinian group Hamas has advertised for those wishing to support the group to donate via Bitcoin.
Pompeo mentioned that should private transactions through crypto become typical without effective regulation, it would therefore “decrease the security for the world, if that’s the direction we travel.”
The risk with anonymous transactions is one that we know well. We know this from 9/11, and the terror activity that took place in the 15 years preceding that where we didn’t have good tracking, the capacity to understand money flows and who was moving money.
Pompeo summarized his view on regulation in his final sentences:
It has helped keep the entire world secure by having access to this information. We need to preserve a global financial system to protect that.
An interviewer later joked that all money laundering up to this point has been done through fiat currency.