The innovative use of virtual currencies is hotter than ever, but so is a dark side of these instruments: their exploitation in ransomware schemes. This year, since January 2021, ransomware attacks have increased dramatically in number and severity. In these attacks, cybercriminals deploy malicious code into the victim’s environment. They then generally demand payment in the form of virtual currencies—particularly anonymity-enhanced cryptocurrencies—in exchange for a decryption key to unlock the victim’s digital infrastructure. To address this problem, and the growing use of virtual currencies in general, several U.S. regulators and legislators have attempted to clarify regulatory requirements related to virtual currency and ransomware.
This alert discusses recent regulatory guidance about virtual currency and ransomware, specifically related to sanctions and anti-money laundering compliance, and the increased focus of the Federal Deposit Insurance Corporation (the “FDIC”), the Board of Governors of the Federal Reserve System, and the Office of the Comptroller of the Currency (the “OCC”) (collectively, the “Federal Banking Regulators”) on virtual currency…
