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Cyber crooks keep holding huge American companies hostage for hundreds of millions in cryptocurrency. And attempts to stop them could have big implications for crypto itself.
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That’s because the wave of cyber attacks is prompting calls for new regulation of cryptocurrency—an asset originally designed to exist beyond the reach of governments or central banks.
Ransomware typically involves locking up or stealing a victim’s files, and then decrypting them when the ransom is paid or threatening to delete the files if it isn’t. And if a victim doesn’t pay up, the attacker will start leaking those files until they get paid.
The frequency of ransomware attacks appears to be accelerating, although trustworthy figures are hard to come by because many companies still don’t want to go public with their ransomware difficulties.
The attacks have begun to impact companies that factor into everyday Americans’ lives.
In May, hackers targeted a company called Colonial Pipeline, which handles nearly half the gasoline and jet fuel supply to the East Coast. The attackers didn’t target Colonial’s operations, but the company said it shut down the pipeline out of fear the hack would spread—prompting gas-price hikes as drivers raced to fill their tanks.
President Joe Biden’s Department of Justice elevated investigations of ransomware to a similar priority as terrorism after the Colonial attack. But the hackers are showing no sign of slowing down, and officials have few tools to stop them.
That dynamic is spurring a debate over new regulations. The Biden administration has already proposed making businesses report any crypto transactions over $10,000 to the IRS. And a coalition of U.S. government agencies released a report this spring calling for tighter crypto regulations to help track and disrupt ransom payments.
Most experts say an outright ban on crypto wouldn’t work, and would only push the tech underground.
But crypto industry insiders say the dangers posed by potential future regulation are real.
“Cryptocurrency markets are not properly considering legal risk,” the investment firm Miller Tabak warned its clients earlier this year.
Heightened regulation poses a challenge to one of the factors that’s helped make crypto so popular: it’s relative independence from government oversight.
And while all this is happening, governments around the world are also racing to develop their own digital currencies.
China is already testing a cyber-yuan. The U.S. federal reserve will release a plan this summer on developing its own so-called Central Bank Digital Currency—or CBDC.
And a world of fully-regulated cryptocurrency wouldn’t be the crypto world we know today. It might be the start of a new era—one in which something that began as an experiment in taking power away from governments, ends up getting co-opted by governments.
