The CEO of Goldman Sachs believes regulators will not be able to monitor the financial system if Bitcoin is allowed to flourish in its present form.
Goldman Sachs senior chairman Lloyd Blankfein has stated that regulators should be “hyperventilating” in response to Bitcoin’s recent success, characterizing the crypto asset as undermining the capacity for lawmakers to monitor the financial system.
While appearing on CNBC’s Squawk Box on Jan. 25, Blankfein asserted that Bitcoin’s pseudonymous nature makes it perfect for illicit financing, stating: “You don’t know whether or not you’re paying the North Koreans, or Al-Qaeda, or the revolutionary guard.”
Despite authorities frequently utilizing the transparency of blockchain to track the use of crypto by terrorist organizations, Blankfein questioned how regulators can allow crypto assets to flourish in their existing form.
“If I were a regulator, I would be kind of hyperventilating at the success of [Bitcoin] at the moment, and I would be arming myself to deal with it,” he said
In order to conform Bitcoin to the existing financial and regulatory apparatus, Blankfein asserts that many of the fundamental freedoms enabled by BTC must be reined in. However, he questioned whether strong demand would continue to exist for Bitcoin without its pseudonymous privacy features:
“This could be workable, but it will undermine the freedom and liberty and kind of lack of transparency that people like about it in the first place. So that’s the conundrum that Bitcoin will have to deal its way out of.”
Blankfein also criticized Bitcoin as a store of value, emphasizing its price volatility and the technological literacy required to self-custody BTC.
“It’s a store of value that can move 10% in a day, that if you lose the code or if you lose the slip of paper — it’s lost forever, or if somebody takes it from you — how will you know,” he said.
In August, the U.S. Justice Department announced it has seized millions worth of crypto from more than 300 wallets associated with Al-Qaeda and ISIS.
In the announcement, Don Fort, chief of IRS criminal investigation, or IRS-CI, emphasized that the agency had been able to trace the crypto to its source — allowing it to dismantle the groups’ financial networks.