What to expect from the new cryptocurrency legislation in terms of crime | Wilnesh News

As the levers of power in Washington, D.C., are set to change hands, Congress and the Trump administration are expected to introduce a raft of pro-cryptocurrency legislation. To date, there has been less attention given to cybersecurity in political endeavors, which may be an issue with cryptocurrencies’ popularity among a wary American public.

Cryptocurrencies, which include not only Bitcoin but Ethereum, Dogecoinand others have a loyal following among American adults. According to the Pew Research Center, 17% of U.S. adults have conducted cryptocurrency transactions, but the market share of U.S. wallets has remained almost unchanged since 2021. According to a public opinion poll A Pew survey conducted shortly before the election showed that 63% of adults said they had little confidence in cryptocurrency investing or trading and believed cryptocurrencies were unreliable and safe.

The incoming Trump administration has been promoting its cryptocurrency bona fides, focusing on industry rather than consumers.

“The most important priority for the industry is to make sure they have a regulatory framework so they can do business,” said Dusty Johnson (R-South Dakota), who helped write the book “Financial Innovation and Technology in the 21st Century” . The law passed the House with bipartisan support but has not yet been taken up by the Senate.

FIT21 does include specific encryption cybersecurity provisions, which Johnson expects the new government to build on.

Glenn “GT” Thompson (R-Pa.), chairman of the House Agriculture Committee and co-author of “FIT21,” said the bill’s cybersecurity provisions remain key for the next administration.

“FIT21 requires significant cybersecurity safeguards for financial intermediaries involved in digital assets,” Thompson said in a statement to CNBC. He added that FIT21 includes clear provisions to ensure regulated firms take steps to assess and mitigate cyber vulnerabilities to protect the services they provide and the assets they hold on behalf of their clients.

“These cybersecurity requirements are critical to protecting digital asset markets and market participants,” Thompson said.

However, some experts are skeptical that as much action will be taken on the security aspects of the legislation, given that cryptocurrency proponents are closely advising the Trump administration.

“People are policy,” said Jeff Le, vice president of global government affairs and public policy at Security Scorecard and a former assistant cabinet secretary in the California Governor’s Office. Le said the incoming economic team, which is topped by SEC Chairman-elect Paul Atkins, Commerce Secretary Howard Lutnick and Treasury Secretary-designate Scott Bessant, “has a strong support for crypto.” Monetary Records”.

Among other key posts in his second administration, President-elect Trump named venture capital investor David Sacks as his artificial intelligence and cryptocurrency “czar.”

The Crypto Industry’s Role in Political Restructuring

The crypto industry has donated significant amounts of money to the 2024 election cycle, and these donations are not limited to Republicans, but also focus more broadly on lawmakers who hold industry-friendly views on crypto regulation. This is likely to continue to influence political calculations. Pro-cryptocurrency bipartisan super PAC Fairshake and its affiliates have raised more than $100 million for the 2026 midterm elections, including commitments from Coinbase and Silicon Valley venture fund Andreessen Horowitz, an early Coinbase backer. Top executives at Andreessen Horowitz have been appointed to positions in the Trump administration.

“We have the most pro-crypto Congress in history, and we have a very pro-crypto president in office,” Coinbase Chief Policy Officer Faryar Shirzad recently told CNBC.

“For whatever reason, it’s rare to see cryptocurrency proponents advocating for greater regulation in the space,” said Jason Baker, senior threat intelligence advisor at GuidePoint Security.

Baker said that the anonymity and independence of cryptocurrencies are often cited as key benefits that legislation would restrict, while the decentralized nature of cryptocurrencies makes them difficult to regulate in the traditional sense.

“Given the signals currently being sent by the incoming administration and the interests of cryptocurrency proponents who have influence over the government, we do not expect significant progress in cryptocurrency regulation over the next four years,” Baker said.

He said that without much action on the regulatory front, there will be some clear implications for cybersecurity, driven by the correlation between a pro-cryptocurrency Washington, D.C., and investors’ bullish bets on digital assets. of.

“Cybercrime is often driven by the benefits of increasing the value of cryptocurrencies. In ransomware, for example, the ransom is often demanded in U.S. dollars, but is most commonly paid in Bitcoin. When Bitcoin increases in value, Cybercriminals will benefit,” Baker said.

“The de-emphasis on cryptocurrency regulation in the future may be a positive indication that Bitcoin cybercriminal activity is still viable and is less likely to be subject to government interference from operators in the space,” Baker said.

Baker added that cybercriminals have also been changing their tactics to evade legislation and scrutiny, turning to lesser-known cryptocurrencies such as Monero.

Ransomware’s potential role in congressional actions

Baker predicts that in the current regulatory environment, regulation centered on organizations that issue cryptocurrency payments—whether in the form of ransom payments or for other purposes—is more likely to be achieved and accepted.

“This could include increasing reporting requirements when ransoms are paid, a policy that has been proposed in recent years without substantial support,” Baker said. Such an approach could be thought of as regulating end users and purposes rather than the underlying cryptocurrency itself. .

In addition to ransomware payments to restore access to technology systems, the use of cryptocurrency payments in digital extortion schemes is common for other reasons, including protecting criminals’ identities and operational security. Private organizations may also choose to use cryptocurrencies to purchase leaked materials or credentials provided on illegal forums.

There may also be cases where individuals attempt to report discovered vulnerabilities under a “bug bounty” program and receive payment – either voluntarily or under duress (so-called “begging the bounty”). They may demand payment in cryptocurrency out of personal preference or a general desire for privacy, and private organizations may or may not oblige.

“While organizations undoubtedly have other options for using cryptocurrencies in some form, these are the primary forms we see more often or more frequently,” Baker said. Baker added: “While such behavior will almost certainly be criticized for its impact on The impact of trading volume has a downstream impact on cryptocurrency value.”

Steve McNew, global head of blockchain and digital assets at FTI Consulting, believes that some online encryption legislation may be introduced, especially to regulate companies affected by ransomware attacks when they pay attackers in cryptocurrency.

“The issue is not just public policy,” McNew said. McNew said if a company is compromised in a cyberattack and required to publicly disclose the ransom it pays, it could make it a greater target for other criminal enterprises in the future. On the one hand, it might make sense to reveal where funds are going and which cryptocurrencies were used in payments, but doing so could put companies (and their customers, employees, and partners) at risk.

“Any policy decision regarding cryptocurrency disclosure in this context will therefore need to balance the need for transparency regarding the use of cryptocurrencies in criminal cases against the risks that such transparency may exacerbate,” McNew said.

Although FIT21 passed the House with broad bipartisan support, it did not specifically address these issues.

Le anticipates some legislative action may try to address the topic. He said: “The next Congress may see more attention on proposed legislation such as the Cryptocurrency Cybersecurity Information Sharing Act of 2022, which would allow companies to share information about cybersecurity threats with the federal government and with each other. information.

Congress may also revisit the work of outgoing Financial Services Chairman Patrick McHenry (R-N.C.) and Rep. Brittany Pettersen (D-Colo.) and the Ransomware and Financial Stability Act of 2024, Le said. The bill aims to “increase the resiliency of financial services” to protect the U.S. financial system from ransomware attacks, establish clear protocols for ransom payments, and ensure that such payments, including those involving cryptocurrencies, are made within a controlled and legal framework .

But he added that it was unclear whether the Trump administration would continue the Biden administration’s leadership role in the International Anti-Ransomware Initiative, a 68-nation coalition that aims to prevent ransomware payments.

The broader battle for Bitcoin governance

McNew said many of the fundamental parameters surrounding cryptocurrencies, including even their definition, could hinder legislation or even aspects of it that are intended to foster innovation and adoption in the industry.

“Before any meaningful legislation can take effect, U.S. lawmakers will also need to work hard to define the basic parameters of roles, responsibilities and how to regulate the industry,” McNew said. For example, establishing a digital asset designated authority is a top priority that needs to be addressed.

The underlying governance structure has been a major sticking point under the Biden administration and a major reason why SEC Chairman Gary Gensler has become a thorn in the side of the cryptocurrency industry.

“Lawmakers must decide whether responsibility lies with the SEC, CFTC or other agencies. Issues regarding taxation and broker-dealer definitions in digital asset markets also need to be defined and a clear set of rules provided to enable The legislation works,” McNew said, adding that reaching an agreement may be difficult given that the House will be so divided next session.