Financial safety

Virtual currencies spark real concern about national security threat

U.S. government officials are increasingly worried about the potential national security threat posed by the rise of cryptocurrencies.

In the past week, the Department of Justice, congressional lawmakers and even Federal Reserve Chairman Jerome Powell have voiced concern about the misuse of digital currencies, especially for money laundering. The topic sparked new interest following Bitcoin’s prominent mention in the indictments of Russian military intelligence officers by special counsel Robert Mueller earlier this month.

Both critics and champions of cryptocurrencies agree that getting the policy right toward the emerging financial technology could be key to the future of the upstart industry — as well as the ability of the U.S. and its allies to cut off funding for terrorists and rogue states.

In a report issued July 20, the Justice Department said it has formed a Digital Currency Initiative to ramp up anti-money laundering prosecutions in cases involving cryptocurrency, which it sees as increasingly used in illicit financing. The initiative is meant to encourage the pursuit of cybercrime using cryptocurrencies across federal law enforcement agencies.