The year 2021 has seen the global expansion of crypto, but multiple cases of crypto-related crimes have cast the industry in a bad light.

According to a new report, criminal use of cryptocurrencies will decrease around the world as more governments learn to leverage uncensored transparency blockchains.

Blockchain is the underlying technology that supports cryptocurrencies. In its study, research firm Chainalysis stated that the increase in legitimate use of cryptocurrencies “far exceeds the increase in its criminal use.”

Cryptocurrency-based crime hit a new high in 2021, with illegal addresses receiving $14 billion (about Rs 813 crore) in 2020.

“Among all the cryptocurrencies tracked by Chainalysis, the total trading volume reached $15.8 trillion (approximately Rs 11,71,09,600 crore) in 2021, which is 567% higher than the 2020 total.

Given this skyrocketing adoption, it is no surprise that more and more cybercriminals are using cryptocurrency. But the fact that the increase was only 79% – almost an order of magnitude compared to overall adoption – may be the biggest surprise of all,” the report says.

Transactions with illegal addresses accounted for just 0.15% of cryptocurrency trading volume in 2021.

Since crypto transactions are decentralized and untraceable in nature, many government officials around the world have raised concerns about the illegal use of crypto assets. From money laundering to terrorist financing, the potential abuse of the crypto industry has added to its delayed legalization.

The report further noted that law enforcement has intensified efforts to arrest and stop cryptocurrency mining by criminals.

For example, in November 2021, the US-based Internal Revenue Service (IRS) criminal investigation announced that it had confiscated over $3.5 billion worth of cryptocurrency from non-tax surveys in 2021. This number represents 93% of all funds the division confiscated during this period.

However, the cryptocurrency market grew to $3 trillion (approximately Rs 2,15,66,720 crore) in 2021, the highest ever.

In a report last year, Chainalysis revealed that crypto-related scams cost investors over $7.7 billion (about Rs 58,697 crore) in 2021.

Last year, the most common form of scam was the classic rug draw, which netted victims more than $2.8 billion (about Rs 21,333 crore) of the cryptocurrency this year.

As digital currencies are the inevitable future, there is a need for international coordination and individual country action to close the legal loopholes that allow cryptocurrency crime to flourish. Recently, financial and regulatory experts from around the world discussed digital assets and money-laundering risks in a webinar organized by Absa, in collaboration with the World Economic Forum (WEF) Global Futures Council and the Financial Action Task Force (FATF). ,

The challenge for regulators around the world is to find appropriate regulatory tools to address the risks posed by greater adoption of cryptocurrencies. Existing regulatory tools have limitations in addressing consumer and financial crime and money laundering risks. This has raised regulatory scrutiny of cryptocurrencies, as launderers have turned to digital currencies such as bitcoin, ether and ripple to “cash” their profits, booming transactions around the world instantly and anonymously.

In a sign of a significant change in regulatory thinking, the Bank of International Settlements (BIS), owned by 63-member central banks and monetary authorities around the world, has announced that “cryptocurrency is not money, but speculative assets that can be used for money.” to facilitate money laundering, ransomware attacks and other financial crimes”.

The idea comes after more than 60 central banks have launched digital currency projects since 2014, suggesting that some central banks Banks regard digital currencies as a preferred route to protect the integrity of the financial system over time.

Bitcoin’s recent volatility has also raised important questions about the long-term viability of the cryptocurrency as an asset class. Similarly, the rise in the incidence of ransomware and other financial crime has led to growing concerns about regulation and how to deal with emerging anti-money laundering/financing of terrorism (AML/CFT) risks.

It is clear that these new forms of money present both opportunities and challenges to the financial industry, policy-makers and consumers. Digital currencies can make international payments more efficient, convenient and secure, while removing the cumbersome operational and security processes associated with the movement of traditional currency, thereby improving overall economic efficiency.

Leave a Reply

Your email address will not be published. Required fields are marked *