WASHINGTON — A new piece of legislation introduced yesterday — the Fight Illicit Networks and Detect (FIND) Trafficking Act of 2018 (H.R. 6069) — could become problematic for adult entertainment cryptocurrencies, if passed.
The proposed FIND Trafficking Act would launch investigations into cryptocurrencies and their role in potentially enabling the efforts of sex traffickers, as well as illegal drug sales.
Cryptocurrencies are playing an increasingly larger role as an alternative method of payment in adult entertainment. Numerous startup cryptocurrencies seeking to snag a piece of the payments market have sprung up.
The bipartisan bill — authored by Rep. Juan Vargas of California and Rep. Keith Rothfus of Pennsylvania, both members of the House of Representatives Committee on Financial Services — would require the U.S. Comptroller General to study “how virtual currencies and online marketplaces are used to facilitate sex or drug trafficking and propose regulatory and legislative actions to put an end to these illicit activities.”
Vargas, in a statement, said he hopes that this bill will make the scope of the cryptocurrency more transparent.
Through the Comptroller General’s findings and proposals, Congress would craft legislative solutions to regulate the use of cryptocurrencies within one year.
Industry attorney Lawrence Walters of Walters Law Group told XBIZ that cryptocurrency has been a payment option of last resort for many adult entertainment providers that have lost access to traditional banking and processing services due to the nature of their work.
“This bill, if passed, would contribute to the narrative suggesting that cryptocurrency equates to illegal activity,” Walter said. “It is not surprising that established financial institutions feel threatened by use of crypto, which does not require any gatekeeper approval or oversight.
“Banks and processors have been stepping up their risk mitigation policies which has resulted in account closures and loss of services for adult companies and performers. This legislative investigation of crypto, and the suggestion that it is inherently associated with trafficking, drugs, or money laundering, may be the beginning of the end to the only viable payment option for those who have been prevented from accessing typical financial services. The bill would only start the process, but it is headed in a dangerous direction.
“Like cash, or the internet itself, crypto can be used for good or ill. Blaming crypto for the misdeeds of some users is short-sighted and harmful to blockchain innovation.”
The FIND Trafficking Act proposal is not the first bill introduced under the Trump presidency that targets illegal sex trafficking online. The proposal comes after President Trump signed the bill package known as SESTA/FOSTA, which effectively banned websites from posting ads for sex workers.
Another bill that continues to have legs is the proposed End Banking for Human Traffickers Act (H.R. 2219), which passed the House of Representatives and will be headed to the U.S. Senate.
Under H.R. 2219, the Federal Financial Institutions Examination Council would be directed to review and improve anti-money laundering programs related to human trafficking, as well as policies for referring suspected cases to law enforcement agencies.
The U.S. Department of State additionally would be directed to report on efforts to eliminate money laundering related to human trafficking and to report to Congress on the number of investigations, indictments and convictions.