Juan Zarate, who formerly worked as a Deputy Assistant to President George W. Bush and as Deputy National Security Advisor on terrorism has expressed fears over blockchain technology. He is widely credited for being the man who helped to create financial instruments that put pressure on enemy states that support terror groups. However, as the use of blockchain technology continues to spread and provide banking services to the unbanked, Zarate is a worried man.
What Zarate Thinks
He noted that there were nefarious actors out there that included state actors such as North Korea and Iran, which were willing to use digital currencies and related technology to circumvent international sanctions. However, he noted that these actors might also decide to use this technology to undermine the global financial system.
Zarate is not against cryptocurrencies and the blockchain. In fact, he sees it as being able to give individuals greater autonomy while boosting commercial activity. He now works as a senior advisor at a think tank based in Washington DC. In fact, he was one of the earliest advocates of the technology. Since 2014, he has acted as one of the advisors of Coinbase, the largest Bitcoin exchange in the US. However, he is adamant that there is a need for more transparency about how governments and the public in general use the blockchain.
Some of Zarate’s Achievements
One of Zarate’s achievements was being able to cut off a whole nation’s access to the US dollar. Since the US is the de facto global reserve currency, if a country is unable to access the dollar, its ability to wage war is lessened. However, in a book he wrote in 2013, he warned that others who wished to wage war on the US could use these financial tools.
Examples of Misuse
Even though he is an advocate of the blockchain, Zarate outlined a few instances where state actors may try to use the technology for illicit purposes. One of the instances he proposed was sanctions evasion. The blockchain, he noted, was an effective way to help a state circumvent sanctions.
For instance, he noted that there was a Swedish startup working on infrastructure to help states evade sanctions. The goal of the startup has been stated as the ability to back “good, hard-working companies and individuals” in Iran.
Various analysts have shown that North Korea has managed to amass a huge amount of Bitcoin, which they use to evade sanctions. South Korea recently accused North Korea of stealing digital currencies worth billions of won.
Zarate noted that since most sanctions rely on the influence of the US dollar, anything that undermines it, undermines the sanction tools the US has. In short, malicious actors could simply siphon off the value of the US dollar in digital currency and use it for nefarious intent.
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