Since the terrorist attacks in Paris on 13 November, the European Union to find ways to learn and restrict the use of Bitcoin in hopes of preventing the financing of terrorism acts using the digital currency. Based on their research, the regulators realized that what is needed is not a strict regulation governing Bitcoin, but the spread of education related to Bitcoin in a greater degree.
"There's nothing wrong with Bitcoin. Bitcoin is just a new part of our financial system, "said Dana Syracuse, Director and member of the Anti-Money Laundering (AML) and Regulatory Compliance Practice at K2 Intelligence.
K2 Intelligence is a company that provides investigative and protection in cyberspace. Before joining into K2 Intelligence, Syracuse had worked at the New York Department of Financial Services and the creator BitLicense.
"Over time, Bitcoin will grow bigger," says Syracuse. "One of the things that I often talk about is the fact that when Bitcoin increasingly bound by strict regulations, which happened just Bitcoin grew and expanded into areas previously unreachable."
"The problem lies not in Bitcoin, and further restrictions on the use of Bitcoin is not a good solution. The perpetrators of criminal acts and terrorism are currently using various technologies to hide their activity from the Internet world. Those who turned to Bitcoin to use technology blockchainnya it is the people who take a wrong step, "said Jason Weinstein, Director of Blockchain Alliance.
Jennifer Shasky Calvery, Director of the Financial Crimes Enforcement Network (FinCEN), expressed his opinion on the Presidential Summit on digital currency held by the US Department of Justice. Calvery explains that Bitcoin some 4 million US dollars are being transacted through regulated institutions. But beyond institutions or companies regulated, there Bitcoin amount of 10 million US dollars transacted. In the event, Calvery confirms that FinCEN does not regulate Bitcoin. They simply regulate financial institutions related to Bitcoin.
Perianne Boring, founder and chief executive officer of Digital Chamber of Commerce, also expressed a similar opinion. In an interview with Bitcoin Magazine, he said, "Virtual currency is already highly regulated, particularly in the area of the G7 (Group of Seven, which consists of Canada, France, Germany, Britain, Italy, Japan, and the United States) , Although there are very strict regulations, the majority of Bitcoin transactions take place outside the regulated institutions, which are the majority occurred in countries that are not members of the G7. "
"Tightening the rules in the area G7 will only complicate the companies digital currency that has been trying hard to comply with central bank rules and regulations. The tighter the existing regulations related to Bitcoin, the greater the likelihood that Bitcoin will be transacted in institutions that are not regulated, "said Boring.
"What is needed is to create regulations that rational, thoughtful and constructive," added Syracuse. "When you regulate something that is on the verge of crisis, often comes the temptation to correct the excessive order to protect yourself. We must be careful not to remove excessive regulation related to Bitcoin. "
The problem lies not in terms of the presence or absence of regulation, but the lack of education
Basically, a lack of education about Bitcoin is a major problem, not a regulation. When the regulator or the government had enough information about Bitcoin, they will step up to the same conclusion, namely: Bitcoin is not problematic.
"I'm somewhat skeptical looks forward to the new regulations related to Bitcoin that can really help," said Vincent D'Agostino, Director of the Association of U.S. Cyber Investigations and Incident Response Practice at K2 Intelligence. Before joining K2 Intelligence, he was an FBI agent involved in the trial of the case 1 and the Silk Road Silk Road 2.
"If there were more people than institutions penindak acts of terrorism are unwilling to spend the time to explore how the technology works blockchain, when they staged the raid, the first thing they do is take the existing data and identify the public key so that they can discover everything related with Bitcoin address it, "said D'Agostino. "They'll be able to say, we initially did not know this Bitcoin addresses belong to whom, but now we have to know all the transactions they do, including who the owner of this Bitcoin wallet."
"Every financial innovation, and every form of transfer of funds emerging surely will bring its own challenges," said Syracuse. "Bitcoin is the same as it was. Terrorism is the first concern in most of the financial system. The use of Bitcoin in activities as it was not much different with the use of another currency or a traditional bank system. Education is key, and education that will bring regulations more rational and productive, and more efficient communication between governments. "
Based on reports from the UK Treasury Department, "There is little evidence that digital currency is being used by terrorists to finance their activities, whether it's a tool to raise funds from supporters, tool paying infrastructure, or tools remittances."
The report also states that, "The risk of the use of Bitcoin in money laundering activity was very low, although there is potential for increased if the use of digital currency in the UK increasingly widespread."
The low risk is due to the inefficiency of the methods used Bitcoin in remittances with a negative goal for all transactions is clearly visible in the ledger blockchain that is accessible to everyone.
"It will be much easier for you to commit money laundering in Euros or US dollars rather than using Bitcoin backed by blockchain decentralized technology," said David Long, Leader and Senior Consultant in Northern California Fraud Prevention Solution. "Although the terms of the investigation, Bitcoin can provide an extra challenge because it takes more effort to find out who is responsible for transactions. However, once the identity of the perpetrator is revealed, blockchain can help you find all transactions ever carried out by the perpetrator. The greatness of Bitcoin is like this that are not owned by Euro or US Dollar. "
Weinstein then explains further that, "Reports of anonymity Bitcoin was actually exaggerated. From criminals or terrorists who use Bitcoin to facilitate their activities are precisely those who are stupid because Bitcoin can be tracked, unlike other payment methods including fiat money / cash. "
Bitcoin is a pseudonymous in the sense that all transactions recorded in the general ledger, but only in the form of public address only. However, when the police managed to identify who owns the public address, they can search for all transactions ever come out or go into the Bitcoin wallet. If the Islamic State of Iraq and the Levant (ISIL) had dealings in Bitcoin and the police managed to find their Bitcoin address, then the authorities can keep track of all transactions ever ISIL do and can gather more evidence to solve the case.
Cash / fiat, on the other hand, it is anonymous. Someone from ISIL could take se-money envelopes containing hundreds of thousands of dollars, the state took it over the edge, and simply buy all the assets he needs to commit acts of terrorism. The police would not have a way to verify and track where the money was transacted. Long then gives examples of how money laundering schemes carried out by an expert fraudsters use US Dollars or Euros can be very difficult to track a virtual or even can not be traced at all.
The problem is, most people are not aware of the ability of Bitcoin in that respect.
"The police did not take advantage of Bitcoin as much as they should do," said D'Agostino. "As long as there are people involved in the transaction Bitcoin, manufacture and use of Bitcoin wallets, and involved in the movement of the digital code, most likely the person will make mistakes in the future. If the person is joined in a group or network of terrorism which continues to move money from one person to another, surely there will be one of those who act recklessly. For example, they forget to encrypt their Bitcoin wallet or leave their keys in the old wallet. This is an opportunity that can be used by the police to exploit that information. "
The key is to educate as possible to the police and national security authorities about how the technology works blockchain, so they can improve their ability to use Bitcoin to track where the money is flowing. Weinstein affirms, "We need more education, not regulation."
Jerry Brito, Executive Director of Coin Center, explained in his blog the reasons why education about Bitcoin is needed: "Overreacting by policymakers anxious in the midst of crisis is indeed quite alarming, and this is why their education about Bitcoin before a crisis like this happened so important. We have been engaged in the field of education Bitcoin for over a year, and we hope that policy makers understand that the overreaction in the making of the regulation is likely to be counterproductive, no matter what is written by the mass media. "
Brito reiterated the points presented by Boring and Weinstein: "In fact, the regulators now understand that digital currencies are not at high risk to be used as a means of financing terrorism, and they also understand only until the point where a digital currency can be used to the criminal action. Restrictions on the use of Bitcoin in their region will only get rid of the legitimate institutions. Finally, the government will be more confusion in tracking the use of Bitcoin transacted by agencies that are not regulated. "
Financial institutions engaged in the world Bitcoin has complied with the regulations that are often applied to financial services institutions in general. Although the government impose regulations Bitcoin addition to financial institutions, of terrorist acts will not be stopped there. Conversely, if the government provide more education about technology and Bitcoin blockchain to the police, they would be able to take advantage of blockchain to track down and arrest the terrorists.
This article is a translation from the writings of Jacob Donnelly in Bitcoin Magazine entitled "Law Enforcement and Regulators Agree: Bitcoin Not Useful for Terrorists, Already Regulated appropriately".
As with the Internet, when they first appeared, Bitcoin is often seen with a look of skepticism by those who do not understand well the technology. Several years ago, the World Wide Web is also considered the potential to become a crime scene. Despite the fact it is true, but we also have to see what the positive impact provided by the Internet. Global world become connected thanks to the Internet, and Bitcoin was like that.
As someone who helped spread the Bitcoin-related education to the public, I often receive the opinions from the public on Bitcoin negative, and some of them are the use Bitcoin to the funding of terrorism and money laundering. This article describes how Bitcoin actually enough to give the opposite effect: bad for the terrorists, great for the police. Bitcoin is traded as a means of transaction in Deep Web as in the case of Silk Road, but Bitcoin now just become a "friend" of the police because it allows them to track all purchase transactions that occur through the public ledger blockchain. And in this article, you can see that now the US government is trying to train investigators and US police agencies to use blockchain in tracking the perpetrators of such criminal acts.
All things there must be a positive and negative side. It is time we looked at Bitcoin with an open mind. The greater your understanding, I believe the greater the sense of awe you against this technology.
