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EU and USA Warn Against the Dangers of Cryptocurrency

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February 19, 2018 | 

Joanna Newman |  0 Comments| 

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Faced with the growing success of Blockchain technology, many financial institutions are sounding the alarm about the dangers of cryptographic currency. Again, this past week, European authorities have released a warning to investors. Many of them wanted to draw attention specifically to a few main concerns.

  • The first concern is that people are investing in the market without realizing the true risk involved.
  • Cryptocurrencies are plagued by extreme volatility and show all the signs of a speculative bubble.
  • Virtual currencies, as well as the exchanges that use them, are not subject to any European regulations.
  • There is no real protection against cyber-attacks.

The absence of any regulation and the fact the Blockchain allows transactions to be carried out anonymously could also have even more serious implications. According to experts, cryptocurrency is a perfect tool for criminals to finance terrorist activities.

Ever since the 9/11 attacks back in 2001, countless securities measures have been put in place by the United States to fight against terrorist activity. But now, with the creation of Blockchain technology, questions of national security have begun to emerge.

Using Blockchain to Finance Terrorism

These days, concerns are apparent, especially to those who have been fighting against cybercrime such as Juan Zarate, former advisor to the Bush administration. The measures taken have been aimed at dissuading terrorist activities. But, with Blockchain’s anonymity, there are concerns that it could easily be used by criminals who are constantly working to undermine security measures.

According to Zarate, countries like Iran and North Korea are seeking ways to circumvent international sanctions and overthrow the entire global financial system. It should be noted that Zarate is not completely against the use of cryptocurrency. He supports the idea that the use of cryptographic money can be used to better personal and international exchanges of finance. He also adds that the US could use this technology to better their control of online transactions.

The Biggest Fears about Blockchain Technology

Currently, Zarate is worried that Blockchain technology could compromise anti-terror measures that have been put in place. However, the biggest fear is that the technology could be used by other countries to circumvent international sanctions.

According to his analysis, the United States is the least present on the international scene when it comes to countries benefiting from cryptocurrency.

Recently, a small Swedish startup company has obtained authorization to develop a program that will alleviate pressures felt in countries like Iran due to international sanctions.

Also, there have been reports that North Korea is in the process of starting a cryptocurrency war fund. South Korea has even accused the Northern country of having stolen billions of dollars when Youbit, a cryptocurrency exchange platform, was hacked back in December 2017.

On the other hand, representatives from the American Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC) have concluded that the Blockchain only poses a minor threat to national security, at least for the moment.

However, if nothing is done, this could be a major problem for US states who don’t have very many measures in place to control and regulate the use of Blockchain technology.

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