Lobby groups seeking to improve the image of Bitcoin and its sisters

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Although cryptocurrencies are steadily gaining support on Wall Street, regulators still view them as a tool for criminals to hide suspicious transactions, challenging the emerging industry as it seeks to gain greater respectability.

The move could represent a potentially lucrative opportunity for new groups in Washington championing cryptocurrencies, as some prominent pro-cryptocurrency lobbyists say they have increased membership numbers and raised millions of dollars to help improve the industry’s image.As banks including Goldman Sachs explore the digital assets of specific customers, recent actions by regulators show a vague way forward. Late last month, an international anti-fraud watchdog proposed regulations that crypto advocates say will crush a large chunk. From their industry.

The recommendations made by 39 members of the Financial Action Task Force stipulated increased monitoring of many cryptocurrency transactions.

These recommendations follow a similar anti-money laundering proposal by the US Treasury Department, which is expected to be completed later this year. On the other hand, many cryptocurrency proponents oppose increased surveillance.

The proposals of the Treasury and the Financial Action Task Force came at a time when Bitcoin entered the current financial mainstream very quickly and rapidly, and the virtual currency was traded on Monday at about $ 59,000, more than double its level at the end of 2020, And more than eight times their level in April, and other cryptocurrencies such as “Ethereum” saw similar gains.

Great expansion
These higher rates have given ammunition to Bitcoin’s emerging Washington lobbying groups, and in the past three months, these groups have used new regulatory pressure to raise millions of dollars in funding and persuade cryptocurrency companies to establish a presence in Washington.

Even as the world of finance embraces cryptocurrencies and raised their prices, this world has tried hard to undermine its reputation as a tool that allows thieves and drug traffickers to hide illegal transactions, so some advocates of cryptocurrencies say that liberating regulators from this perception represents the biggest challenge faced by virtual assets.

“We in this industry think it’s a big problem,” said Christine Smith, Blockchain Association CEO. She added that these laws would place heavy monitoring burdens on investors and operators of cryptocurrency networks, and make it difficult for some services to remain decentralized.

“They miss all of the goal of this innovation,” says Smith, noting that since December, the Blockchain Association, a trade group for cryptocurrency companies, has added 10 members, bringing its total to 34 companies.

The association, which is less than three years old, has more than doubled its staff to seven. Smith said that the association’s members, including the cryptocurrency exchange platforms Binance and Ripple Labs, discussed the possibility of making major contributions to the association to ramp up recruitment and buy ads to improve Bitcoin’s image.

War ammunition
R. Coin Center, a Washington-based think tank that is a cryptocurrency advocacy group, managed to raise more than $ 300,000 through a fundraising campaign, in which most of its participants were individual donors who contribute small amounts. Of cryptocurrencies. The center also received $ 2 million from the cryptocurrency investment company Grayscale Investments LLC, and $ 1 million from Twitter founder Jack Dorsey, whose other company, Square Inc, recently invested $ 30 million in Bitcoin. .

Currently, his group is saving money as a war fund in case it needs to fight a greater pressure battle or file a lawsuit over the new regulations, said Jerry Britto, CEO of Queen Center.

“Our job is to definitely say, ‘There is a real danger here, and we all need to work together, but don’t remove a good thing when trying to get rid of something bad,’” Britto adds.

It is reported that one of the first uses of “bitcoin” was due to it being the only currency accepted on the website for drugs and other illicit commodities known as the “Silk Road”, which was closed by the FBI in 2013. More recently, “Bitcoin” was the payment method. A favorite of hackers who freeze computer data in so-called (ransomware) attacks.

Even the January riots at the US Capitol had a connection with Bitcoin. A month before the attacks, a computer programmer (now dead) had sent from France more than $ 500,000 in cryptocurrency to the far-right groups that helped launch the attack.

Criminal activities
For their part, advocates of Bitcoin say the illegal activity is becoming less important. Bitcoin wallets are identified only by a series of tokens, but the blockchain record that records Bitcoin transactions is public; This allows authorities to track the path of funds when wallet owners try to convert “bitcoin” into dollars. They can see that the wallet is hosted by Coinbase, and for example, the authorities can legally request the name of the owner from Coinbase.

Chainalysis, a forensic analysis firm for Bitcoin that works with law enforcement agencies, says illicit activity is a decreasing percentage of Bitcoin transactions, although there are still problematic areas such as attacks. (Ransomware).

“Law enforcement investigators are getting smarter” in tracking criminal activity on the Bitcoin network, said Jesse Spiro, chief government affairs official at Chain Analysis.

Despite this, world governments have remained cautious. For example, a government official in India said earlier this year that the country would move to ban cryptocurrencies. Nigeria and China have also taken strict measures to purchase these currencies.

US ban
In the United States, Representative Brad Sherman, a California Democrat, wants to ban Americans from using Bitcoin. Although the Sherman idea has not taken root, billionaire investor Ray Dalio of Bridgewater Associates said in March that he saw a high probability that the United States would ban its use at some point.

Regulatory threats are not preventing some banks from entering this market. Goldman Sachs said in March that it was close to offering digital asset investment tools to clients of its wealth management unit. Morgan Stanley plans to provide its customers with access to cryptocurrency money. However, until now, the largest US banks still do not allow their clients to directly acquire “bitcoin”.

At the heart of the Treasury and Financial Action Task Force proposals are recommendations to broaden the extent to which governments monitor cryptocurrency transactions. Both proposals require financial firms to report more frequently on large transactions, and to identify counterparties for the transactions that their customers undertake when carrying out certain activities.





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