The U.S. Justice Department is planning to increase its scrutiny of crypto trading platforms to target illicit behaviour.<\/p>\n
According to Eun Young Choi, director of the National Cryptocurrency Enforcement Team (NCET), the DOJ is targeting cryptocurrency exchanges that engage in crimes themselves or allow \u201cother criminal actors to easily profit from their crimes and cash out.\u201d<\/p>\n
In a Financial Times<\/em> report on Monday, National Cryptocurrency Enforcement Team director Eun Young Choi noted that crypto crime has grown “significantly” in the last four years. As such, the department will be going after crypto exchanges that skirt anti-money laundering or know-your-customer laws or who do not invest in comprehensive compliance and risk mitigation processes.<\/p>\n \u201cAnd so we hope that by focusing on those types of platforms, we\u2019re going to have a multiplier effect,\u201d Choi remarked.<\/p>\n The DOJ also aims to focus on crimes in the decentralized finance (DeFi) space, specifically relating to chain bridges, where users are vulnerable to hacks and thefts. Notably, cross-chain bridges have been a prime target for hackers in recent years, with billions worth of cryptocurrencies lost in a slew of exploits and attacks. Choi, who was announced as the first director of the NCET in February 2022, acknowledged that this was a critical issue for the DOJ, given North Korean state-sponsored hackers have emerged as \u201ckey actors\u201d in the crypto sector.<\/p>\n The United States has notably taken a short-sighted and enforcement-heavy approach that is extinguishing innovation and entrepreneurship in the crypto space.<\/p>\n The DOJ crypto enforcement unit under the Biden Administration has become one of the government bodies with the most stringent stance on crypto globally. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have also ramped up their scrutiny on cryptocurrency exchanges following the collapse of Sam Bankman-Fried\u2019s FTX empire last November.<\/p>\n The predictable consequence of the brutal crackdown on the nascent sector is that more crypto companies are leaving the U.S. in search of friendlier jurisdictions. For instance, Binance.US canceled its $1B asset buy deal with Voyager, while Coinbase opened a crypto derivatives exchange in Bermuda as a prescient measure in response to the regulatory uncertainty in the U.S.<\/p>\n American policymakers should just allow crypto innovation to flourish by providing a realistic registration rulebook for centralized exchanges to operate within the country and letting permissionless competition deliver the perks of decentralized exchanges. Regulators should not be wary of U.S. markets\u2019 innovative potential. They should instead fear killing it with impossible rules.<\/p>\nCrypto Companies Are Fleeing The U.S. Amid Regulatory Tensions<\/strong><\/h2>\n