On September 21, the US Treasury announce It will penalize a cryptocurrency exchange for its role in facilitating financial transactions for ransomware representatives.
Cryptocurrency exchange SUEX, a private company registered in the Czech Republic, has facilitated transactions involving the illicit proceeds of at least eight variants of ransomware. The Treasury has indicated that more than 40% of the company’s transaction history is linked to illicit actors.
This means that SUEX will not be able to transact with US entities and communicate with US citizens. This penalty also marks the first action against the virtual currency exchange after a series of ransomware and cyber attacks in 2020. Ransom payments caused a total loss of $400 million in 2020 alone, four times what happened in 2019.
The Treasury Department has stressed on several occasions that virtual currency activities are legal but that bad actors who use these technologies for illicit gain and activities need to be punished. These new regulations appeared with the recent attack on Solarwinds That affected many government agencies including Homeland Security, State, Commerce, and Treasury.
Cybersecurity company FireEye discovered the breach and reported an attack on its advanced systems. Later, Microsoft also confirmed that it had found signs of malware in its own systems and that the hack was affecting its customers as well. The company’s disclosure was crucial to discovering and understanding the extent of the attack. With this background, the government emphasized that its own knowledge of cyber attacks and breaches was the first step toward meaningful mitigation legislation.
With the imposition of penalties and tax implications Cryptocurrency In all its power, it can seem a pessimistic outlook for investors and bankers looking to get into digital currency.
Fortunately, these new laws may do the opposite as they will provide more clarity to the crypto landscape. In fact, a more regulated trading environment could increase the approval rating of the blockchain altogether.
Biden’s campaign against ransomware attacks
This spring, the Biden administration hurry Its campaign is to target and respond to high-level ransomware attacks, including many that trace its origins to Russia. The Treasury Department stressed that the new sanctions are not intended to cripple the US cryptocurrency scene; Instead, it will serve as a warning to cryptocurrency exchanges to improve their compliance and avoid illicit transactions.
With this new designation, all SUEX properties – and interests in real estate under US jurisdiction – are prohibited.
Furthermore, under this new law, US citizens are generally prohibited from engaging in any transactions with any sanctioned entities. Financial institutions in the United States that do business with these sanctioned entities will be penalized and may even be sanctioned themselves.
The warning also states that a US entity that disobeys this designation will face a penalty if it makes payments to a sanctioned actor regardless of whether or not it is aware that the perpetrator has been sanctioned.
The new advisory from the US Treasury also issued guidance to companies to deal with ransomware attacks. The Cyber Incident Notification Act Passed in response to the attack on SolarWinds requires federal agencies, federal contractors, and critical infrastructure companies to report a ransomware attack to the Department of Homeland Security when a breach is identified.
This legislation gives companies immunity when they report a violation in which the Department of Homeland Security will be required to anonymize personally identifiable information. This means that companies can easily report incidents and the government can act efficiently.
The Treasury also urges companies to pay a ransom in the event of an attack or breach because it may encourage attackers to target other organizations. The best way is to report the attack and cooperate with law enforcement.
The Deputy Treasury Secretary said cryptocurrency exchanges such as Suex are “essential to attackers’ ability to profit from ransomware attackers.” Thus, regulating such exchanges may reduce the risk and frequency of ransomware attacks and improve the security of exchange users.
What does that mean for cryptocurrencies?
what makes encryption Revolutionary is its accessibility. On the face of it, such sanctions limit the bodies that promote the free trade mission of digital currency and blockchain. But as exchanges become more standardized, it may become easier for bodies like SUEX to exist. We hope it’s in safer forms.
The lack of regulation on cryptocurrencies can lead to fraud and increase the risk of data breaches, making it a more risky environment for cryptocurrency investors and users.
Earlier this year, SEC President Gary Gensler warned that the new crypto asset class is riddled with scams, fraud, and abuse in certain applications, and as such, a comprehensive crypto regulatory framework is sorely needed as the industry is on the cusp of a boom.
While libertarian crypto enthusiasts may not welcome stricter regulations, they are much needed to bring the industry into mainstream adoption.
There are some bills passed by the House and waiting for a green signal from the Senate. This includes Removing Barriers to Innovation Act 2021 This requires the SEC and CFTC to create a Digital Asset Working Group in order to ensure collaboration between regulators and the private sector to encourage innovation.
The Consumer Safety Technology Act It is a combination of blockchain billing and requires the Secretary of Commerce and the Federal Trade Commission to examine and report on the use of blockchain technologies and digital tokens.
Ultimately, the regulations will be very beneficial to the crypto industry as it will provide a safety net for businesses and customers. More stringent Regulation Crypto skeptics may encourage market investments that have been hesitant due to the largely unregulated nature of the cryptocurrency and blockchain industry.
The Biden administration is moving in the right direction to regulate these industries in order to provide better safeguards to customers against fraud and data breaches. These new regulations bring the crypto industry a step closer to a unified regulatory framework, however, comprehensive regulation of cryptocurrencies is still needed.
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