The underpinnings of cryptocurrencies could be used to reign in their illicit use. So says Christine Lagarde, managing director of the International Monetary Fund, who argues that governments should “fight fire with fire” in the crypto world.
The supposed threat: Transactions on public blockchain networks, like Bitcoin and Ethereum, are very difficult, if not impossible, to trace. The result, Lagarde says, “is a potentially major new vehicle for money laundering and the financing of terrorism.”
Lagarde’s solution: “The same innovations that power crypto-assets can help us regulate them,” she writes. Purpose-built distributed ledger systems could help regulators, governments, and markets share information more easily, she says. Combined with other technologies, like biometrics and AI, this approach could “help us remove the pollution from the crypto-assets ecosystem.”
But: Centralized financial surveillance systems are anathema to cryptocurrency enthusiasts. New, advanced systems likes the ones proposed by Lagarde would likely just inspire many to pursue new technologies and methods for skirting them.
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