Commodity Futures Trading Commission (CFTC) Commissioner Christy Goldsmith Romero has proposed reducing the anonymity of cryptocurrencies as a way to manage the risks associated with digital assets.
CFTC Commissioner Opposes Cryptocurrency Anonymity
The statement was made during the keynote speech on Illegal Finance and Other Key Risks of Digital Finance at City Week 2023 in London on 25 April.
Romero emphasized that governments and the industry must combat anonymity, which is the primary feature that makes cryptocurrencies attractive for illicit finance.
In his speech, Romero said that the risks associated with digital assets must be managed, as market integrity, national security and financial stability are so important and cannot be compromised.
Romero said that reducing the risks of illicit finance in the crypto market requires addressing the authentication issue.
While the public blockchain offers some transparency and traceability, the use of mixers and anonymity-enhancing technology raises the potential for significant risk, he added.
“It is possible for all crypto companies to stay away from mixers and anonymity-enhancing technologies while at the same time providing appropriate financial privacy for customers.”
Crypto mixer is a service that combines cryptocurrencies of many users to mix the origins and holders of funds.
This level of privacy is difficult to achieve otherwise, as most of the Bitcoin, Ethereum, and other public blockchains are transparent.
While talking about the need for authentication, Romero emphasized that two mixers, Blender and Tornado Cash, were recently sanctioned by the United States Department of the Treasury.
According to him, Tornado Cash allegedly laundered $7 billion, including millions of dollars stolen by Lazarus Group, a North Korean state-sponsored hacking group that engages in cyberattacks to aid illegal nuclear and ballistic missile programs.
It is not investment advice.