Cook Islands Considers Cryptocurrency Regulation: Expert Raises Concerns about Privacy and Due Process

Background

The Cook Islands government has introduced the Tainted Cryptocurrency Recovery Bill, aimed at addressing concerns about money laundering and terrorism financing in the cryptocurrency market. However, expert Ano Tisam has raised serious concerns about civil liberties, privacy, and due process in the proposed legislation.

What is Cryptocurrency?

According to Google, cryptocurrency is digital money that doesn’t require a bank or financial institution to verify transactions and can be used for purchases or as an investment. Transactions are then verified and recorded on a blockchain, an unchangeable ledger that tracks and records assets and trades.

Expert Concerns

Tisam argues that while the Bill includes measures aimed at addressing concerns about civil liberties, such as establishing a Cryptocurrency Restitution Tribunal and provisions for judicial review, the effectiveness of these safeguards in practice would be key to determining their sufficiency in protecting Cook Islanders’ civil liberties. He also expressed concern over the extraterritorial effect of the Bill, which could mean that international transactions and holdings might be scrutinized or intervened upon by Cook Islands authorities even if the activities occur outside their jurisdiction.

Concerns about Civil Forfeiture

Tisam raised concerns about civil forfeiture, noting that the ability to seize assets without a criminal conviction poses risks and raises concerns about property rights, due process, and the potential for misuse. He also highlighted the need for clear guidelines on ethical recovery hacking and strict privacy safeguards to ensure individual privacy and confidentiality in financial dealings.

Focus should be on Banks

Tisam argued that if the Bill is truly aimed at combating money laundering and terrorism financing, then the focus should shift to the opaque operations of banks, not cryptocurrencies. He noted that most retail crypto investors operate on public blockchains and it would be impractical for them to engage in illegal activities.

Statistics

• The United States Treasury Department has stated that the use of virtual assets for money laundering remains far below that of fiat currency and more traditional methods.
• According to United Nations research, anywhere between $800 billion and $2 trillion is laundered via traditional fiat banking channels each year, while cryptocurrencies are used in a small fraction of such activity.

Next Steps

The Bill has been referred to a special select committee for consideration. As the government moves forward with its plans to regulate the cryptocurrency market, experts like Ano Tisam are urging caution and careful consideration of the potential consequences for civil liberties and privacy.

Key Takeaways

• The Cook Islands government is considering regulating the cryptocurrency market.
• Expert Ano Tisam has raised concerns about civil liberties, privacy, and due process in the proposed legislation.
• The effectiveness of safeguards in practice will be key to determining their sufficiency in protecting Cook Islanders’ civil liberties.
• The focus should shift to the opaque operations of banks, not cryptocurrencies.