A former Treasury Department official has recommended government regulation for cryptocurrency miners in the country in a written testimony to the U.S. Senate subcommittee on International Trade and Finance.
David Murray, former director at the Office of the Illicit Finance of the Treasury Department and current vice president at Financial Integrity Network, wrote that Congress should create a new class of financial institutions under the Banking Secrecy Act (BSA) to cover firms that are involved in processing transactions related to cryptocurrencies. He referred to such firms as virtual asset service providers (VASPs) and to miners as Virtual Asset Transaction Validators (VAST) who must be regulate themselves and their users. As part of this practice, they must identify users and other parties involved in transactions. Murray recommended that FinCEN should be entrusted with the task.
“The lack of systemwide financial crimes compliance (FCC) governance for some existing cryptocurrencies allows criminals space to operate and makes it difficult for the United States to isolate rogue service providers from the U.S. financial system,” wrote Murray.
While other transaction enablers and validators dealing in fiat systems are regulated by the government under BSA, virtual assets are exempt from these regulations. This has allowed cryptocurrencies to become a medium of choice for illicit and illegal transactions.
Murray further argued that the openness of the public blockchains pose a threat including aiding money launderers and human traffickers, despite offering no proof with his claim. It is not yet clear what the senate panel has decided regarding the future of cryptocurrency mining regulation in the country.
Bitcoin mining is not regulated under a specific law in the United States even though cryptocurrencies themselves can be regulated through government sanctioning of addresses for wanted entities and individuals around the world and in the US.
While governments have tightened regulations around cryptocurrencies and their transactions, miners have largely escaped these regulations. Even in China, where there is a blanket ban on cryptocurrencies, thousands of miners operate their high-end ASICs and run their own mining pools. While the Chinese government has indicated that it is planning to ban mining in the country, no concrete steps have yet been taken.
Other countries like Canada, the UK and European nations are also debating the impact of cryptocurrency mining and whether or not they need any regulations. So far the debate is mostly limited to their environmental impact and energy-intensive nature rather than their role as currency transaction validators.