CFTC proposes reducing anonymity to manage risks
The commissioner of the Commodity Futures Trading Commission (CFTC), Christy Goldsmith Romero, has proposed reducing the anonymity of cryptocurrencies as a means of managing the risks associated with digital assets. The statement was made during the keynote speech on Illicit Finance and Other Key Risks of Digital Finance at City Week 2023 in London on April 25.
Romero stresses the need for governments and the industry to tackle the primary feature that makes cryptocurrencies appealing to illicit finance – anonymity. In her speech, Romero said that the risks associated with digital assets must be managed, as market integrity, national security and financial stability are crucial and cannot be compromised.
Reducing illicit finance risks in the cryptocurrency market requires addressing the challenge of identity verification, Romero said. Although the public blockchain offers some transparency and traceability, the use of mixers and anonymity-enhancing technology increases the potential for substantial risk, she added. In her words:
A crypto mixer is a service that blends the cryptocurrencies of many users together to confuse the origins and owners of the funds. Because Bitcoin, Ethereum, and most other public blockchains are transparent, this level of privacy is otherwise hard to achieve.
While talking about the need for identity verification, Romero highlighted that Blender and Tornado Cash, two mixers, were recently sanctioned by the United States Treasury Department. According to her, Tornado Cash was allegedly involved in laundering $7 billion, which included millions of dollars stolen by Lazarus Group, a North Korean state-sponsored hacking group that has been involved in cyberattacks to aid illicit nuclear and ballistic
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