US President Donald Trump is to monitor all cryptocurrency transactions worldwide as a result of a new law which specifically identifies Russia, Iran and North Korea as countries of concern.
Trump signed a new bill into law that demands that the governments of Iran, North Korea and Russia “combat illicit finance” by enhancing “intergovernmental co-operation” in the emerging and technologically complex area of cryptocurrencies, also known as digital currencies and virtual currencies.
The bill indicates that the US government has conducted a trend analysis of “emerging illicit finance threats”, which included cryptocurrencies.
The US is calling for “a discussion of and data regarding trends in illicit finance, including evolving forms of value transfer such as so-called cryptocurrencies, other methods that are computer, telecommunications, or Internet-based, cyber crime, or any
other threats that the Secretary may choose to identify”.
Cryptocurrencies while still difficult to understand for most people, are increasingly gaining acceptance as a method of payment for goods and services online.
Perhaps of more concern to governments, cryptocurrencies have been used to transfer large amounts of money across international borders.
One of the features of a cryptocurrency is that while it’s said to provide more transparency and security in terms of how the payment works and how it’s recorded, the identity of those engaged in transactions are much more difficult to trace.
As the International Monetary Fund noted in a discussion document last year, “while cryptocurrency transactions are publicly recorded, users are known only by their virtual currency ‘addresses’, which cannot be traced back to users’ real-world identity. As such, cryptocurrency transactions are more transparent than cash but more anonymous than other forms of online payment”.
This anonymity is what is likely to concern governments, and may explain the US calling for more international co-operation.
Bitcoin, which was the first cryptocurrency and is said to still be the most widely used, is used in more that 235,000 transactions a day.
And there are more than a dozen well known cryptocurrencies on the market, with new ones being launched all the time.
The other key thing about cryptocurrencies that is of concern to governments is that the system does not require central banks or any of the “traditional” financial infrastructure.
Cryptocurrencies mainly rely on massive amounts data storage and processing, which is why so many companies are investing in computer hardware and data centres to provide what could be called “accountancy” services for digital currencies.