ExBiden Advisor Anticipates Imminent Regulation of Cryptocurrency in the United States

The dual nature of cryptocurrencies has become increasingly evident, particularly in their role in enabling child sexual abuse material (CSAM). In an interview with crypto.news, former Whitehouse insider Moe Vela predicted government intervention in the near future.
U.S. Senators Elizabeth Warren and Bill Cassidy have criticized the cryptocurrency sector, expressing concerns about the issue. Federal agencies have been called upon to strengthen their ability to identify and prosecute cryptocurrency transactions associated with CSAM.
Their concerns come at a crucial time when privacy-focused cryptocurrencies and mixing services have been identified as tools for laundering funds derived from CSAM, as detailed in recent studies by Chainalysis and the Financial Crimes Enforcement Network (FinCEN).
The senators’ apprehensions have prompted the Department of Justice (DOJ) to take action against platforms like KuCoin and Binance, resulting in charges related to operating an unlicensed money-transmitting business and processing suspicious transactions. The need for stricter regulation and industry-wide oversight is evident as agencies continue to develop new tools and strategies to address the growing misuse of digital assets for criminal activities.
Sharing his perspective in an exclusive interview, Moe Vela, Senior Advisor to Unicoin and Former Senior Advisor to President Biden, offered his insights into this critical issue.
Recent events have raised concerns about cryptocurrencies facilitating illegal activities like CSAM. With Senators Warren and Cassidy calling for tighter regulations, what impact do these proposed changes have on the crypto market, particularly in curbing illegal activities?
These horrific challenges are inevitable with the introduction of a new currency or financial system. The bipartisan approach taken by the Senators will bring the effort some extra viability for the implementation of solutions. I predict that within the next year, our nation will have crypto regulation that I hope will be preventative and empowering but not destructive of the sector. The federal government must fight the urge to over-regulate in a reactive manner. Healthy regulation is inevitable and necessary.
Building on the senators’ concerns, what regulations do you see as critical to mitigate the risks of cryptocurrencies enabling child sexual abuse materials (CSAM)?
I am confident that the ultimate result will be a U.S. regulatory environment as it relates to cryptocurrency that will mirror many of the parameters, restrictions and protections of the regulatory standards of traditional currency and financial systems.
Given the anonymity and decentralization of cryptocurrencies, which can enable illicit activities like the purchase of CSAM, how crucial is government involvement in fostering transparency and ensuring that cryptocurrencies are backed by real assets?
As a senior advisor to Unicoin, this is a topic I am quite passionate about. I do believe that the federal government has an integral role in creating a regulatory environment that fosters and encourages transparency, as well as asset-backed cryptocurrencies. As I have said publicly for several years, buying Bitcoin could very possibly put you in business with nefarious forces and probably some of the world’s most dangerous dictators and nations. Not to mention, that with those early cryptocurrencies, you are simply buying and trading air. It is beyond my comprehension that investors would feel safe and confident in buying any security that is not asset-backed.
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How can we strike a balance between regulation and fostering innovation to ensure compliance without stifling the industry?
I am one of those in the cryptocurrency sector who advocates for total transparency, and asset-backed and compliant crypto. The regulations that will be necessary and forthcoming will be less stringent and harsh, in my opinion, as it relates to the risk-mitigating nature of asset-backed, transparent and compliant crypto.
Drawing from traditional financial systems, how can safeguards be adapted to the decentralized nature of cryptocurrency to prevent misuse, especially in cases like CSAM transactions?
In several speeches on this topic the past few years, I have stressed how vital it is that we look at what has worked well in traditional financial systems and what regulations have been effective in the prevention of CSAM transactions and other egregious activities. We simply enact that which has worked and disregard that which was ineffective as the crypto regulatory parameters are developed and implemented. There is no need to completely reinvent the wheel. It’s a new and young frontier but lessons from the past will be vital in setting the tone for the sector’s regulatory future.
On a broader scale, given global financial and security standards, how important is international collaboration in framing regulations that address the use of cryptocurrencies in illegal activities?
The global nature of the cryptocurrency, digital and financial systems make it absolutely mandatory that the United States collaborate with allies around the world. It is imperative that crypto regulatory standards be respected, adhere to and enforceable across geographic lines. This digital age and blockchain know no geographic boundaries so regulations, laws and policies must be geo-blind.
Finally, what proactive roles should cryptocurrency exchanges and wallet providers undertake to prevent the use of their platforms for illegal transactions, particularly involving CSAM?
First and foremost, every wallet provider and crypto exchange should not be waiting for regulations and guidance from the government. Everyone involved in the crypto and blockchain ecosystem must be proactive and implement company policies and procedures that mitigate the risk of nefarious activities, including CSAM. In Texas where I grew up, we would say they need to take the bull by the horns.
So what do you suggest?
Play offense and don’t wait to play defense is a consistently strong approach when it comes to these regulatory and policy discussions. It is very important that the sector unite and be a part of the solution—waiting until the regulations are developed and implemented and then just complaining is irresponsible. Now is the time to get involved and be at the table as they are being developed and discussed.
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