Home Community Insights US Justice Department to Double its Crypto Team, Global X Applies for Bitcoin ETF

US Justice Department to Double its Crypto Team, Global X Applies for Bitcoin ETF

US Justice Department to Double its Crypto Team, Global X Applies for Bitcoin ETF

The US Justice Department announced on Friday that it plans to double the size of its cryptocurrency enforcement team, as part of its efforts to combat illicit activities involving digital assets. The department’s Cyber-Digital Task Force, which was established in 2018, will expand from 10 to 20 prosecutors, who will focus on investigating and prosecuting crimes related to cryptocurrency, such as money laundering, ransomware, tax evasion, and fraud.

According to a recent announcement, the department plans to double the size of its crypto enforcement team, which is part of the Money Laundering and Asset Recovery Section (MLARS). The crypto enforcement team was established in 2018 to focus on cases involving the use of digital assets for illicit purposes, such as ransomware attacks, dark web transactions, terrorist financing, and tax evasion.

The team works closely with other federal agencies, such as the FBI, the IRS, and the Secret Service, as well as with international partners, to investigate and prosecute complex and high-profile crypto cases. According to a report by Chainalysis, a blockchain analysis firm, the total value of cryptocurrency transactions increased by more than 600% in 2020, reaching over $1.3 trillion.

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However, the report also found that the share of illicit transactions involving cryptocurrency declined from 2.1% in 2019 to 0.34% in 2020, suggesting that the majority of crypto users are law-abiding and legitimate. The department also highlighted some of the recent achievements of the crypto enforcement team, such as the seizure of more than $1 billion worth of bitcoin linked to the Silk Road dark web marketplace, the indictment of North Korean hackers for stealing and laundering over $1.3 billion in crypto and fiat currencies, and the recovery of $2.3 million in bitcoin paid as ransom to the hackers who attacked the Colonial Pipeline.

The department’s announcement was welcomed by some industry experts and advocates, who see it as a sign of the government’s commitment to fostering a safe and compliant crypto ecosystem. As Jerry Brito, executive director of Coin Center, a non-profit research and advocacy group, tweeted, “This is good news. The more resources DOJ dedicates to going after actual criminals using crypto, the less bandwidth they’ll have to pursue misguided cases against innovators building on this technology.”

The Justice Department said that it recognizes the potential benefits of cryptocurrency and blockchain technology, such as enhancing financial inclusion, efficiency, and innovation. However, it also warned that these technologies pose significant challenges for law enforcement and national security, as they can be used by criminals and terrorists to evade detection and regulation.

The department said that it will work closely with other federal agencies, such as the Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, as well as with international partners, to ensure a coordinated and effective response to crypto-related threats.

The department also urged the crypto industry to cooperate with law enforcement and comply with applicable laws and regulations, such as anti-money laundering and counter-terrorism financing rules. It said that it will use all available tools and resources to hold accountable those who misuse cryptocurrency for illegal purposes.

Global X has Applied for a Bitcoin ETF

Global X, a New York-based provider of exchange-traded funds (ETFs), has filed an application with the U.S. Securities and Exchange Commission (SEC) to launch a Bitcoin ETF. The proposed fund, named Global X Bitcoin Trust, would track the performance of the world’s largest cryptocurrency by market capitalization, using the CME CF Bitcoin Reference Rate as its benchmark index.

A Bitcoin ETF is a type of investment vehicle that allows investors to gain exposure to the price movements of Bitcoin without having to buy, store, or manage the digital asset directly. Instead, investors can buy and sell shares of the ETF on a regulated stock exchange, just like any other security. The ETF would hold Bitcoin in a custodial account and issue shares that represent a proportional interest in the underlying assets.

The benefits of a Bitcoin ETF include enhanced liquidity, lower costs, tax efficiency, and regulatory oversight. A Bitcoin ETF would also broaden the appeal of Bitcoin to institutional and retail investors who may be reluctant or unable to invest in the cryptocurrency directly due to various barriers or risks.

However, the SEC has not yet approved any Bitcoin ETF applications in the U.S., despite receiving dozens of proposals over the years. The regulator has expressed concerns about the potential for market manipulation, fraud, and lack of transparency in the Bitcoin market, as well as the adequacy of investor protection and custody arrangements. The SEC has also repeatedly delayed or rejected previous applications, citing the need for more data and analysis.

Global X is not the only firm that is currently seeking to launch a Bitcoin ETF in the U.S. Several other companies, including VanEck, WisdomTree, Fidelity, and Valkyrie, have also filed similar applications with the SEC in recent months, hoping to capitalize on the growing demand and popularity of Bitcoin among investors. The SEC has designated August 10 as the date by which it will either approve or disapprove VanEck’s application, which was filed in December 2020 and is considered to be the most advanced among the pending proposals.

The approval of a Bitcoin ETF in the U.S. would be a major milestone for the cryptocurrency industry, as it would signal the recognition and acceptance of Bitcoin as a legitimate asset class by one of the most influential financial regulators in the world. It would also likely trigger a surge in demand and price for Bitcoin, as well as spur innovation and competition in the ETF space.

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