Texas Lawmaker Calls For KYC Requirements for Cryptocurrency

A Texas lawmaker has flagged up the need for more regulation in cryptocurrency markets, suggesting that cryptocurrency exchanges should be required to adhere to Know Your Customer (KYC) and anti-money laundering provisions.

Citing fears over the possible abuse of cryptocurrencies by terrorists and criminals, Congressman Roger Williams said these requirements should be demanded of startups in the space.

His ideas were submitted as an addendum to a hearing in the House of Representatives earlier this month, where the subject of future regulation of cryptocurrency came under scrutiny.

It comes at a time of escalating calls for greater regulation in cryptocurrency markets, particularly as far as consumers are concerned, which would see them brought more into line with traditional financial and investment market requirements.

The hearing in the House of Representatives was held by the Subcommittee on Terrorism and Illicit Finance of the House Financial Services Committee, and was specifically looking at the technology through the lens of financing terrorist and other criminal activity.

While Williams recognized the structural impact cryptocurrencies are already having, and will continue to have, on global financial systems, and the many ‘exciting opportunities’ afforded by cryptocurrencies, he sounded a more cautious note regarding their potential for misuse.

“(We must not) aid the actions of terrorists and criminals ... Unless we in Congress develop rational and balanced policies, we may be enabling the very terrorists who wish to destroy us.”

His address spoke of the requirement for other financial services companies, including startups in analogous non-digital markets, to adhere to KYC and anti-money laundering compliance requirements, stressing that these too should be extended to the emerging cryptocurrency space.

“Some in the digital currency world argue that digital finance requires a relaxation of these standards. This is absolutely incorrect.”

The calls come at a time of increasing scrutiny of the emerging cryptocurrency asset class, which already enjoys significant multibillion-dollar trading volumes on a daily basis.

With several U.S. states already shaping their legal approach to cryptocurrencies, and governments and regulators worldwide looking to establish their own frameworks for regulation, the move can be seen as moving lawmakers in the House of Representatives a step further to devising their own compliance requirements for these emerging businesses.