A Department of Justice taskforce is crafting a strategy to address the use of cryptocurrencies by cybercriminals, according to US Deputy Attorney General Rod Rosenstein.

In a February 26 discussion at the Financial Services Roundtable, US Deputy Attorney General Rod Rosenstein revealed that the Department of Justice’s (DOJ) recently formed cybersecurity taskforce is developing a “comprehensive strategy to deal with” the use of cryptocurrencies for money laundering.

Rosenstein reported that with an “increasing volume of organized cybercriminal activity,” many of the schemes that criminals employ to obscure the origins of their ill-gotten funds now “involve bitcoin and other cryptocurrencies which do not flow through the traditional financial system.” With conventional approaches proving less than effective in identifying illicit virtual currency transactions, the DOJ has gone back to the drawing board to consider new methods for spotting money laundering operations.

“Increasingly,” he said, “every case we deal with winds up being in one way or another a cyber case: either it’s executed using cyber tools, or the proceeds are transferred electronically, or the evidence is stored electronically.”

Asked whether he is concerned that cryptocurrencies enable their users to remain anonymous, Rosenstein replied that:

“It’s not true that anything is really fully completely anonymous, right? We all know that there are ways to trace criminal activity … there will be other ways that people leave trails and ultimately even if they’re dealing in cyber currency they’re ultimately going to try to convert that – launder it – into physical currency, and so there are ways to trace these cases, but it requires a lot of sophistication.”

One significant challenge that the DOJ faces in remaining up to the task, he admitted, is retaining personnel after training them in cybersecurity, because their knowledge bases and skill sets make them valuable to private sector entities.

The deputy attorney general also noted the difficulty inherent in prosecuting cybercriminal cases, given that their perpetrators often live outside the US. The DOJ has, however, “had some success in successfully gaining custody of cyber criminals, sometimes by catching them in third countries that do cooperate with us, sometimes by pursuing extradition.” Alexander Vinnik, a Russian national suspected of laundering stolen funds at a time when he was allegedly operating the cryptocurrency exchange BTC-e, is expected to be extradited to the US in spite of Russian attempts to have him face justice in his home country.

Speaking of digital assets generally, Rosenstein told those assembled that “every new technology finds early adopters in people with criminal intent, and cyber currency is no different.”