President Biden’s nominee for the Treasury Department’s terrorism and financial intelligence arm, Brian Nelson, vows to create the necessary crypto regulations to meet AML goals if confirmed.
Regulating AML and Crypto Is Nelson’s Main Objective
After the US Securities and Exchanges Commission (SEC) recused itself of regulating cryptocurrencies, or at least stated that it would not be looking too heavily into digital assets, for the time being, President Joe Biden’s nominee for the position of undersecretary at the Treasury Department may seek to amend that and pay closer attention to crypto. Brian Nelson appeared in front of a Senate Committee on Banking, Housing, and Urban Affairs and elaborated on his candidacy as well as his ambitions as a potential undersecretary. His focus would lie on enforcing Anti-Money Laundering (AML) with a particular focus on cryptocurrencies.
Nelson is applying for the department’s terrorism and financial intelligence arm. During his hearing, Nelson made it understood that he would look to address numerous issues that could undermine the established financial order in the present-day US. His focus on crypto comes at a time when the United States is on alert over the increasing number of crypto-ransomware attacks that have paralyzed numerous companies on US soil and turned into a headache for law enforcement and ordinary citizens.
Yet, President Biden believes that a tougher response is needed to help rein in hackers who have benefited from the anonymity of cryptocurrencies and blockchain to launch their attacks on US companies. The Biden administration has called for a global alliance against wrongdoers allowing countries to pool efforts and pursue offenders regardless of their nationality. Nelson’s plan to counteract illegal operations facilitated by cryptocurrencies is a tap in a similar vein.
Taking a question from Sen. Catherine Cortez Masto about the recent spate of crypto heists, Nelson argued that the Anti-Money Laundering Act of 2020 already expanded regulators’ ability to undermine existing regulation.
Don’t Stop Responsible Innovation, Regulate It
Creating crypto was a part of what Nelson described as “responsible innovation” in the country. If confirmed, he said that he would look to introduce regulation that allows cryptocurrencies to operate as part of the existing financial order without undermining it. He further noted that the Financial Crimes Enforcement Network or FinCEN could tap into the Bank Secrecy Act and use it as a powerful tool to set wrongs brought on by nefarious parties trying to skirt financial regulation.
Nelson was joined by Biden’s nominee for assistant secretary for terrorist financing at the Treasury Department. Elizabeth Rosenberg said that she would also look into making AML regulatory requirements a better fit to address any concerns stemming from the ill-defined status of some crypto assets, creating an “appropriate and consistent” framework.
Current Treasury secretary Janet Yellen has expressed her concerns about crypto in the past, arguing that it makes for a particularly difficult AML regulation. The United States, though, has been investing heavily in new solutions that allow its law enforcement and regulators to track presumably “untraceable” digital assets such as Monero. The US Department of Justice was even able to retrieve $2.3 million of the ransom that Colonial Pipeline was forced to pay to have its operations released after the company was attacked and had operations shut down by hackers.