In previous posts, we’ve covered some of the tools that law enforcement has at their disposal. Using technologies like geofencing and blockchain analytics, law enforcement can pursue key policy objectives like preventing illicit finance or ensuring sanctions compliance. Market participants’ use of these same tools also support law enforcement’s mission.
Clearly, these tools are working; law enforcement officials have an excellent track record of identifying, pursuing and countering on-chain illicit financial activity.
That doesn’t mean there isn’t more we can do to combat illicit finance. But it does mean that any discussion of illicit finance in the crypto and DeFi ecosystems must begin with a recognition of just how successful law enforcement already is in policing the ecosystem.
Which brings us to the topic for this brief post. As we work to build out and expand the ability of government and law enforcement officials to pursue policy objectives in crypto and DeFi markets, we must continue applying what exists that already works — and absolutely eschew what won’t.
Otherwise, we’ll waste time and resources pursuing policy objectives via mechanisms that won’t succeed in accomplishing them. “Don’t fix what’s not broken” sounds obvious enough, but it’s a point that’s lost on many even though law enforcement has a demonstrated track record of successfully enforcing sanctions and prosecuting illicit activity in the crypto space.
And since we already know what’s been working, the answer to what policymakers can do to alleviate any concerns about illicit activity in peer-to-peer digital asset markets is quite clear: more of what law enforcement has already been doing! A clear answer is unique in the context of digital assets, and for that reason worth emphasizing. Law enforcement has repeatedly demonstrated its ability to combat illicit finance successfully in these markets; all they need is more resources to devote to the task.
If Congress wants to further combat illicit finance in the crypto ecosystem, it should provide law enforcement agencies with more resources to scale their current, proven approach. More money isn’t always the answer, but in this case it is!
Looking ahead, advances in the technology tools available to law enforcement may make their job even easier. Developing these tools should be a priority. But for now, the next step requires nothing but unleashing law enforcement to continue doing its job — and that means it requires Congress to provide them with the funding they need to do it.