Representatives from crypto giants Coinbase and Circle have urged the U.S. government to crack down on non-compliant international digital asset firms – some of which include their biggest competitors.
Grant Rabenn, Legal Director of Financial Crimes at Coinbase, told Congress on Thursday that criminals are seeking out “offshore platforms” to avoid anti-money laundering rules enforced by “onshore regulated exchanges.”
Coinbase VS Offshore Exchanges
Such entities, Rabenn claimed, “often play jurisdictional wack-a-mole” expecting that regulators “won’t care” as they attempt to avoid tough anti-money laundering requirements imposed by regulators.
“The U.S. government should use all of its existing tools to go after these platforms,” Rabben said during a House Financial Services Committee hearing titled “Crypto Crime in Context” on Thursday.
“Many recent enforcement actions in the crypto anti-money laundering space are good news – accountability should happen,” he added.
Binance, the world’s largest cryptocurrency exchange, agreed to pay a historic $4 billion fine in November for its failure to comply with anti-money laundering (AML) rules, following a years-long investigation by the Department of Justice (DOJ).
Its founder, Changpeng Zhao (CZ), was also forced to resign from the company. Its new CEO, Richard Teng, says he is redirecting the company to focus on regulatory compliance and financial transparency, alongside establishing a physical headquarters in Abu Dhabi.
Time To Tackle Tether, Says Circle
While Coinbase targeted exchanges, misbehaving stablecoin issuers were on Circle’s radar.
The company has previously used smart contract technology to freeze its dollar-pegged USDC tokens that fall into the wrong hands. Other companies haven’t taken such measures, the firm claims, because they view themselves as above AML regulations.
“I believe no company should be allowed to reference the U.S. dollar without having democratic values inside their U.S. dollar-backed stablecoin,” said Caroline Hill, Circle’s Senior Director of Global Policy and Regulatory Strategy.
When asked specifically about Circle’s largest competitor, Tether, Hill said that the government should already have the authority to take action on Cantor Fitzgerald – the company holding most of Tether’s reserve assets – for facilitating terrorist financing.
“I hope that they’re looking at this seriously given Tether’s reputation, as well as the data that we’ve seen that they’re contributing to terrorist financing and other malign activities,” she added.
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