ExBiden Advisor Anticipates Imminent Regulation of Cryptocurrencies in the United States
The dual nature of cryptocurrencies is becoming increasingly evident, especially in their use for facilitating child sexual abuse material (CSAM). Moe Vela, a former White House insider, told crypto.news that he anticipates imminent government intervention.
U.S. Senators Elizabeth Warren and Bill Cassidy have criticized the cryptocurrency sector, expressing significant concerns. Federal agencies have been urged to enhance their capabilities in detecting and prosecuting cryptocurrency transactions linked to CSAM.
This call to action comes at a critical juncture, with privacy-focused cryptocurrencies and mixing services identified as tools for laundering funds derived from CSAM, according to recent studies by Chainalysis and the Financial Crimes Enforcement Network (FinCEN).
The senators’ concerns have prompted the Department of Justice (DOJ) to take action against platforms like KuCoin and Binance, involving charges related to operating unlicensed money-transmitting businesses and processing suspicious transactions. The push for tighter regulation and industry-wide oversight is clear as agencies develop new tools and strategies to combat the misuse of digital assets for criminal activities.
In an exclusive interview, Moe Vela, Senior Advisor to Unicoin and former Senior Advisor to President Biden, shared his perspective on this pressing issue.
Recent events have highlighted the role of cryptocurrencies in facilitating illegal activities like CSAM. With Senators Warren and Cassidy advocating for stricter regulations, what impact do these proposed changes have on the crypto market, particularly in curbing illegal activities?
These challenges are an inevitable part of introducing a new currency or financial system. The bipartisan effort by the two senators lends extra credibility to the implementation of solutions. I predict that within the next year, we will see crypto regulation that I hope will be preventative, informational, and empowering, rather than destructive to the sector. The federal government must resist the urge to over-regulate reactively. Healthy regulation is both inevitable and necessary.
Building on the senators’ concerns, what regulations do you see as critical to mitigate the risks of cryptocurrencies enabling CSAM?
I am confident that the U.S. regulatory environment for cryptocurrency will ultimately mirror many of the parameters, restrictions, and protections of traditional financial systems.
Given the anonymity and decentralization of cryptocurrencies, which can enable illicit activities like the purchase of CSAM, how crucial is government involvement in fostering transparency and ensuring that cryptocurrencies are backed by real assets?
As a senior advisor to Unicoin, I am passionate about this topic. I believe the federal government plays an integral role in creating a regulatory environment that fosters transparency and supports asset-backed cryptocurrencies. As I have said publicly for several years, buying Bitcoin could potentially involve dealing with nefarious forces, including some of the world’s most dangerous dictators and nations. With early cryptocurrencies, you are simply buying and trading air. It is beyond my comprehension that investors feel safe and confident in buying any security that is not asset-backed.
How can we strike a balance between regulation and fostering innovation to ensure compliance without stifling the industry?
I advocate for total transparency and asset-backed, compliant cryptocurrencies. The necessary forthcoming regulations will likely be less stringent and harsh due to the risk-mitigating nature of asset-backed, transparent, and compliant crypto.
Drawing from traditional financial systems, how can safeguards be adapted to the decentralized nature of cryptocurrency to prevent misuse, especially in cases like CSAM transactions?
In several speeches over the past few years, I have emphasized the importance of adopting effective regulations from traditional financial systems to prevent CSAM transactions and other egregious activities. We should implement what has worked and disregard what was ineffective as we develop and implement crypto regulatory parameters. There is no need to completely reinvent the wheel. It’s a new and young frontier, but lessons from the past will be vital in setting the regulatory tone for the sector’s future.
On a broader scale, given global financial and security standards, how important is international collaboration in framing regulations that address the use of cryptocurrencies in illegal activities?
The global nature of cryptocurrency, digital, and financial systems makes it absolutely mandatory for the United States to collaborate with allies worldwide. It is imperative that crypto regulatory standards be respected, adhered to, and enforceable across geographic lines. This digital age and blockchain technology know no geographic boundaries, so regulations, laws, and policies must be geo-blind.
Finally, what proactive roles should cryptocurrency exchanges and wallet providers undertake to prevent the use of their platforms for illegal transactions, particularly involving CSAM?
Every wallet provider and crypto exchange should not wait for regulations and guidance from the government. Everyone involved in the crypto and blockchain ecosystem must be proactive and implement company policies and procedures to mitigate the risk of nefarious activities, including CSAM. In Texas, where I grew up, we would say they need to take the bull by the horns.
So what do you suggest?
Playing offense and not waiting to play defense is consistently a strong approach when it comes to regulatory and policy discussions. It is very important that the sector unites and becomes part of the solution. Waiting until regulations are developed and implemented, then just complaining is irresponsible. Now is the time to get involved and be at the table as they are being developed and discussed.
