In a recent development within the cryptocurrency regulatory landscape, key figures from Coinbase and Circle have voiced their concerns to U.S. lawmakers, urging for a crackdown on non-compliant firms and stablecoin issuers, notably Tether.

Cracking Down on Crypto Crime

During a pivotal meeting with the House Financial Services Committee, Grant Rabenn, head of Financial Crimes Legal at Coinbase, highlighted the challenges posed by offshore crypto firms. Rabenn revealed that, despite the Office of Foreign Assets Control (OFAC) sanctioning only 560 cryptocurrency addresses, Coinbase’s investigations have uncovered over eight million addresses associated with nefarious activities. He attributed a significant portion of crypto-related crimes within the U.S. to these foreign entities.

The Role of Offshore Exchanges

Rabenn criticized offshore exchanges for their lack of compliance with stringent AML regulations, which regulated U.S. exchanges are required to follow. He accused these platforms of playing “jurisdictional whack-a-mole,” attempting to evade regulation and expecting leniency from authorities.

Circle’s Stance on USD-Backed Stablecoins

Caroline Hill, Circle’s Chief of Global Policy and Regulatory Strategy, took a firm stance on the oversight of U.S. dollar-linked entities. She emphasized the need for democratic principles to be ingrained within USD-backed stablecoins and pointed out the major custodian for Tether, Cantor Fitzgerald, as a point of concern. Hill urged the government to use its existing powers to curb any facilitation of financial crimes by these custodians.

Advocating for Proactive Measures

Hill further expressed her worries regarding the practices of some stablecoin issuers, especially those not taking preemptive actions such as employing smart contract technologies to deter the misuse of their digital tokens.

Conclusion

The call for action from Coinbase and Circle marks a significant moment in the ongoing effort to ensure the integrity of the crypto sector. By advocating for the enforcement of regulations and the adoption of responsible stablecoin issuance practices, these industry leaders are shaping the future of cryptocurrency governance.