The impact of cryptocurrency on security clearances

Bitcoin, Ether, and other currencies have long been in a state of limbo when it comes to federal laws. Depending on which department is talking, they may be considered currencies, or maybe not, and they may be foreign currencies, or maybe not. However, with the increased focus on regulation, it can be assumed that soon enough, a consensus will be reached.

But until that day comes, each department must regulate itself, and that has interesting implications in the United States, especially for those looking to work in positions where a security clearance is needed.

Security clearances are issued by the United States Department of Defense. Right now, the DoD does not have guidelines on how owning cryptocurrencies should impact the security clearance of an individual. According to the Pentagon, there is significant concern that owning cryptocurrencies indicates that the individual is someone inclined to engage in risky, or even criminal, behavior.

Should the DoD decide that owning cryptocurrency makes someone ineligible for a security clearance, the impact could be massive; over four million people currently hold some level of security clearance issued by the DoD.

On the surface, this might seem reasonable; cryptocurrencies certainly can be used in illegal activities, with certain coins being more likely to be used in such enterprises than others. And the DoD does not want to issue security clearances to criminals. However, implementing a ban on those holding such currencies could be problematic for government efforts to expand American influence in the technology sphere.

Those in the tech industry are more inclined than the general population to invest in cryptocurrency. This means that if the US wants to recruit the best and brightest for technology positions, they will either need to allow for cryptocurrency ownership or risk not getting the best candidates for given positions. As cryptocurrencies can be highly valuable, candidates may prefer to keep them than hold a government job.

For now, the DoD is not taking action on the matter, instead waiting for the Securities Exchange Commission to give further guidance.

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