Company Outlines Potential Sanctions Compliance Solutions for Crypto Services
The U.S. should work closely with industry to protect against sanctions risks in the digital-asset marketplace, including through novel security tools, cryptocurrency privacy company Iron Fish said in comments this month to the Treasury Department.
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Iron Fish, responding to the agency’s September request for information on digital-assets sanctions compliance (see 2209190013), said the U.S. needs to “strike the right balance between protecting privacy and trying to keep bad actors from exploiting it.” The company said financial companies should use “privacy preserving technologies and wallets” that can be built with “view keys,” which allow their owners to “reveal their transaction history to regulated entities and others as necessary to show that they have not been involved in illicit activity.”
Iron Fish also said “decentralized controls” are another solution. “Things like screening wallet addresses for sanctions or other criminal exposure, waiting periods for higher risk addresses when moving between blockchains or protocols, and other ways to make it more difficult for criminals to move digital assets in decentralized finance,” the company said. “But whatever the solution ends up needing to be, it will be better if the public and private sectors work together in developing it.”