Yesterday, an expert witness told a U.S. Senate subcommittee that cryptocurrencies are clearing the way for human trafficking, saying this industry can be much better controlled than it is now.
David Murray, the vice president of product development and services at Financial Integrity Network began his speech by focusing on the immense profits human traffickers are turning.
“Developed economies are the most profitable for human traffickers, with criminal organizations earning more than $34,000 annually in profit from each victim in North America,” said Murray.
On September 3, Murray proposed a new system to be approved by the US Congress, one which involves establishing a new group of regulated financial organizations. The newly-formed class would consist of cryptocurrency miners – or, as he calls them, “virtual asset transaction validators”.
Murray proposed a number of ways to better manage this industry, one of which involves having cryptocurrency miners obey the AML laws, which, if put into action, would suppress blockchain payments.
“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,” said Murray.
He added that crypto miners have to at least control who can engage in networks and examine any issuers, exchanges or the curator they work for. This type of system would be considerably different from the present blockchain system, focusing on monitoring thr previously established objectives of decentralization.
Essentially, a great deal of people hold the stance that cryptocurrencies were the step in the right direction, getting away from government-controlled currencies and giving more power and control to the people. However, what David Murray presented before the subcommittee directly opposes the premise on which the current blockchain industry has been developed.
Murray, who was also the former director of the Office of Illicit Finance and the US Treasury Department, continued his speech by saying that human trafficking is deeply connected with the entire economic system. He said that other types of criminals, for instance drugs lords, mostly work with cash, as opposed to human traffickers who among other methods also use cryptocurrencies.
Murray believes that the main problem is poor financial transparency, referring to minor transactions made via retail payment systems, online payment systems, cryptocurrencies, and larger transactions conducted through anonymous organizations.
Dealing with crypto miners the way Murray believes is right would be equivalent to banning them from engaging in common crypto networks, said Peter Van Valkenburgh, director of non-profit research and advocacy centre Coin Center.
“It’s couched as regulating but what it would be is an effective ban on American persons or businesses using open blockchain networks because it would require them to use it on a permissioned basis,” said Van Valkenburgh. “It’s just a ban on a whole type of technology,” he added.
Murray admitted that implementing the solutions he presented would be difficult as those regulations would significantly stifle some of the current blockchain-based payments and prevent them from operating as they do today, creating a brand new crypto world as a result.