The Department of Justice (DOJ) released a report Monday (June 6) that urged the U.S. to strengthen its coordination with other nations to investigate and combat crimes involving digital assets.
DOJ´s report comes in response to President Joe Biden´s executive order issued in March to explore the responsible development of digital assets. DOJ engaged with other agencies and state departments including Homeland Security, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) to determine how to best strengthen international law enforcement cooperation. The report concludes that despite the steps already taken to combat the illicit use of digital assets, “efforts must evolve to meet the challenge.” The report recommends expanding the U.S. operational and capacity-building efforts with international partners, increasing information sharing and closing regulatory gaps across jurisdictions.
The perceived pseudonymity of cryptocurrencies makes them attractive vehicles for money laundering and other criminal exploits, the report said. “The cross-border nature of digital asset technologies accordingly requires collaboration with foreign law enforcement partners to locate and gather electronic records and digital evidence … to seize and prevent further distribution of digital assets linked to crime.”
According to the report, two of the most important criminal activities associated with cryptocurrencies are money laundering and ransomware, although the list also includes fraud, theft, narcotics trafficking and others. DOJ is not the only agency working on how to improve crypto surveillance and the collaboration with other departments and the legislative branch is noticeable. For instance, on Tuesday (June 7), the Senate Committee on Homeland Security and Governmental Affairs held a hearing to address the rising threat of how cryptocurrencies are being used on ramson payments and may facilitate ransomware attacks. Some of the recommendations put forward by the Committee Chairman Sen. Gary Peters, D-Michigan, focused on the need for federal agencies to have more data on this type of crime and share more information across agencies.
Read More: US Lawmakers Take on Crypto Ransom Payments
The same recommendation — sharing information with other law enforcement partners — is in the DOJ report. In particular, the report recommends four actions for more effective transnational criminal investigations involving crypto assets:
One of the reasons why cross-border collaboration is critical, the report said, is because the often-inadequate regulation and supervision in other countries, coupled with a lack of compliance enforcement for digital asset trading platforms, allow criminals to expose the U.S. and international financial systems to risk. Gaps in anti-money laundering (AML) regulatory regimes can create opportunities for criminals to engage in “jurisdictions arbitrage” to take advantage of regulatory inconsistencies, the report said.
This is an area where Europe is proposing a rule that will force crypto exchanges to report every transaction, regardless of the amount.
Read More: Crypto Faces New Restrictive AML Rules From EU Parliament Experts Say
Senators Unveiled Crypto Bill
DOJ’s report came the day before Sens. Cynthia Lummis, R-Wyoming, and Kirsten Gillibrand, D-New York, unveiled bipartisan legislation that seeks to create a broad and all-inclusive regulatory and legal framework for cryptocurrencies, stablecoins and the decentralized finance (DeFi) market, including tax policy.
From a payments perspective, the bill would exclude crypto purchases under $200 from having to report capital gains to the Internal Revenue Service (IRS) — a complex task that is currently required for any purchase, even a cup of coffee.
Read More: Senate Crypto Bill Debuts, and Crypto Industry Gets Big Wins
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