Financial Integrity Network (FIN), a strategic advisory firm, has recommended U.S. Congress to create a new class of financial institution under the Bank Secrecy Act (BSA) to regulate firms in the cryptocurrency sector.
The new class, virtual asset service providers (VASPs), should be regulated based on the type of service they provide, said FIN, in a testimony published Sunday ahead of a hearing.
The U.S. Senate Committee on Banking, Housing, and Urban Affairs’ subcommittee on National Security and International Trade and Finance, is scheduled to hold a hearing on Tuesday, in which, FIN’s vice president for product development and services, David Murray, will testify, among others.
“Some VASPs are currently regulated as money transmitters under the BSA. Others are not regulated at all," said Murray, adding: “Even for those VASPs currently regulated as money transmitters, the regulations are insufficient to protect virtual assets from exploitation.”
The hearing, entitled, “Human Trafficking and its Intersection with the Financial System,” will discuss ways to prevent financial transactions related to human trafficking or to detect them quickly once they have occurred.
Murray said strengthening cryptocurrency regulations would “emphasize counterparty financial institution due diligence,” as the current system makes it difficult for the U.S. “to isolate rogue service providers from the U.S. financial system.”