Lawmakers and crypto detractors around the world often call money laundering a potential source of worry for cryptocurrency usage. However, a fresh report from news outlet VentureBeat outlines why cryptos actually offer superior identification and prevention of money laundering.
Regulatory concerns over crypto money laundering are overplayed
This comes as the last week has seen some regulatory backlash against crypto ventures. Perhaps most notably, President Donald Trump took to Twitter to attack Bitcoin. Following this, a draft bill to “Keep Big Tech Out of Finance” reportedly leaked, and US Treasury Secretary Steven Mnuchin said crypto was a “national security issue”.
These are just some of the latest regulatory issues faced by cryptocurrencies. Oftentimes, however, lawmakers refer to money-laundering concerns as one of the main hurdles to clear before mainstream adoption and regulatory acceptance can ensue.
Nonetheless, these crypto money laundering concerns are, in fact, often overplayed. According to a recent report by VentureBeat, crypto can be used by malicious actors – however, it also states that crypto could actually solve the money-laundering problem.
First and foremost, the article – written by Tom Robinson, co-founder of crypto compliance company Elliptic, highlights how illicit fiat payments still dwarf illicit Bitcoin usage.
Around $829 million worth of Bitcoin have been spent on dark web payments so far during 2019. As such, this is a mere fraction of the massive $2.2 trillion worth of illicit traditional payments spent every year.
Could crypto actually help combat money laundering?
Consequently, illicit payments actually represent a very small share of Bitcoin and overall crypto payments. This is the case despite news outlets’ and regulators’ frequent comments painting crypto as intrinsically linked to money laundering.
VentureBeat notes that as retail and institutional crypto usage increases, the myth of widespread fraudulent Bitcoin usage is increasingly being disproven. Moreover, awareness that crypto asset transactions are generally not anonymous, but rather quite transparent, is growing.
As such, a growing amount of people realize that illicit payments can be identified and traced. As a result, money laundering can in many cases be harder to get away with using cryptocurrencies in comparison to using fiat currencies.
This comes as the majority of cryptocurrency assets, including Facebook’s upcoming Libra crypto, are based on transparent transaction ledgers. Due to this, anyone can readily download the Bitcoin blockchain to view the details of all transactions.
It remains to see how long it will take for regulators to warm to the notion of cryptocurrencies – and accept the fact that crypto can actually aid firms in meeting their anti-money laundering obligations.
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Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the cryptocurrency industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.