Pentagon Needs To Decide If To ‘Red Flag’ Cryptocurrencies May 23, 2018 May 23, 2018 Kate Leaman
Bitcoin NewsMay 23, 2018 by Kate Leaman

Pentagon Needs To Decide If To ‘Red Flag’ Cryptocurrencies

With The Pentagon seeking to establish a tech-savvy workforce, one of the problems they face is determining whether to hire anyone who has invested or traded in bitcoin and other cryptocurrencies.

The main reason behind this question is to determine whether dealing with cryptocurrencies is an indicator of risky behavior or is it just another investment choice.

This debate reflects the current status of the cryptocurrencies in the eyes of the government.

Some see cryptocurrencies as a vessel for potentially illegal activities, while others think it is just a new way to invest and pay for purchases. This is especially important when recruiting for the departments that manage U.S. national security. Bitcoin can be used to pay for America's secrets in an anonymous manner and this has people concerned.

Right now, there are quite a few terrorists organizations and cybercriminals that use cryptocurrencies to ensure their transactions are hidden from investigators. There are even criminals who expressly wish to be paid in bitcoin and other digital assets. However, alongside this illicit activity are legitimate investments and purchases done by bitcoin. The U.S. government's decision on whether bitcoin ownership can be considered a red flag can also negatively affect the growth of the cryptocurrency market. But it would also make it difficult for the Pentagon to recruit tech-savvy employees.

In a statement, Greg Touhill, a former Federal Chief Information Security Officer, said

If we're going to say that if you've got a Bitcoin or another digital currency account that could be a signal or shoot up a red flag for a security clearance, guess what? Those people aren't going to sit around waiting to try to onboard for a government job. It would grow the backlog considerably, in my view

Pentagon: Mixed Signals

The Pentagon has not helped by sending mixed signals on the matter. Initially, a Defense Security Service employee said that bitcoin can be considered a foreign currency and needed to be reported. However, a later announcement mentioned that there was no official guidance on the status of cryptocurrencies. Right now, the decision of whether to report bitcoin ownership depends on who you ask.

The lack of guidance has only given additional headaches to government contractors that need to hire workers with security clearances. As it is, they are facing a backlog of more than 700,000 background checks to ensure that everyone has the right security clearance. This will already cost billions of dollars to clear up and adding checks for bitcoin and cryptocurrencies will add to that.

Right now, the Pentagon is waiting for guidance from the country's financial regulatory agencies. This includes the Securities and Exchange Commission and the Treasury Department.

AuthorKate Leaman

Kate is market industry expert who has spent majority of her life on wall street, she has thought to have a knack at picking the right stocks to invest into. With the rise in cryptocurrencies she has is now able to use her expertise to a new market and give us insights on what we can expect in the present and the future.