"Virtual currency-related business activities are illegal financial activities, it seriously endangers the safety of people's assets". Says the People's Bank of China
"Cryptocurrency transactions are devoid of proper regulation. They are not issued by entities that are neither neither licensed now legal. It's anonymity makes it prone to financial crimes, hence the ban." Says the Nigerian government.
"Cryptocurrency have been used to launder profits of online drug traffickers and a tool to finance terrorism." - Treasury Secretary Janet Yellen.
Similar statements have been made by countries like Canada, Egypt, Taiwan, Indonesia and many financial institutions. According to them, the advent of Cryptocurrency has brought about an increase in financial crimes.
The first crypto currency, Bitcoin was created in 2009 to serve as an alternative to Fiat money. It was intended to provide an alternative payment system, one that would be free of central control and still be used just like traditional currencies. As the years go by people saw the need to embrace this digital currency, hence it's growth and the emergence of Altcoins.
If we are to conduct a poll, definitely a great percentage of the world's population will agree that cryptocurrency has indeed brought about a positive change in the economy, both personally and worldwide. But why do some think it has brought about negative impacts, such as fraud and illegal activities?
For one thing, it should not be expected that any means of exchange will be free of illegal activities. Whether is it Fiat, Trade by Barter, or digital currency there is always the possibility of illegal activities. To expect that not to happen is to be waiting on pigs to fly.
However, it becomes a source of concern if the activities are becoming rampant and getting out of control. As it stands, the percentage of illegal activities conducted with cryptocurrency is far lesser and insignificant to that of Fiat currency. How do I mean?
According to a 2021 report from Chainanalysis, in 2019 criminal activity represented 2.1% of all cryptocurrency transactions. In 2020 however, the value dropped to just 0.34%. This means that criminal activity with cryptocurrency transactions is so much insignificant when compared to Fiat, and it's use is going down every year.
The Real problem
Obviously, if we want to focus on where the money laundering is we need to look at the government-backed physical and traditional currency; Fiat. If cryptocurrency accounts for less than 1 percent of illegal activities, then over 99% belongs to cash. A 2020 report by SWIFT (Society for Worlds Interbank Financial Telecommunication) concludes that cases of cases of money laundering through cryptocurrency remains relatively small compared to volumes of cash laundered via traditional methods.
Hence the traditional currency is still the most preferred for illicit activities by the perpetrators. This is majorly due to the fact that crypto is easy to track because blockchains already exist for the majority of transactions. There the date, time, amount, type of currency, sender and receiver address are stored and can not be altered. This makes it easier to track down many transactions.
Cryptocurrency is not a haven for illegal activities but a medium for an expansive range of secure, trackable transactions. Therefore, to say that crypto currency activities is a "source for concern" is not looking at the bigger picture.
First posted on readcash
Posted Using LeoFinance Beta