There has been endless speculation surrounding the safety and legitimacy of cryptocurrencies in recent years, with particular emphasis on their use for criminal activity. For many, cryptocurrencies are nothing but lawless high-speed rollercoasters brimming with fraud and scamming activity.
As Congressman Tom Emmer told president of the Federal Reserve Bank of Minneapolis, this is not the case. President Neel Kashkari said that cryptocurrencies are "95 percent fraud, hype, noise and confusion" and that he has not seen any uses other than "funding illicit activities like drugs and prostitution".
The Congressman fired back at Kashkari tweeting:
Crypto-based crime represented only 0.34% of the entire transaction volume in 2020. Unfortunately, most crime is still conducted with the cash you print.
Despite this, many individuals and agencies seek to warn and in some cases deter consumers from crypto assets. For one, the US Securities and Exchange Commission's (SEC) new chair, Gary Gensler likened the market to 'the wild west'.
It is becoming increasingly clear, however, that despite the uncertainty of the general population regarding cryptocurrencies, reports have shown crypto related criminal activity rapidly decreased in 2020 and is significantly lower than crimes that utilise traditional fiat currencies.
The amount of digital currency transactions associated with money laundering, for example, is far lower than that of suspected money laundering in the traditional financial sector. Individuals and agencies often omit the ease by which companies like Chainanalysis can track digital money laundering and other criminal activities on the blockchain network. Their data likewise indicates the low rates of cryptocurrency use for money laundering and other crimes.
Crimes like theft, drug trafficking and money laundering are all traceable and only compile a fraction of digital transaction volume. Earlier this month, when hackers stole $823 million AUD from PolyNetwork, blockchain security firm SlowMist traced the hackers email, IP address and device fingerprints within a matter of hours. 48 hours later almost all the funds were returned with the remaining $44.8 million having been frozen to prevent laundering.
The fear of the unknown tends to motivate agencies and individuals in attempts to 'protect' consumers with warnings and stay-away directions. It is easier to cast out a new technology than to learn and regulate it. With new systems and technologies being created every day to protect consumers and trace criminals and an expanding regulatory regime, it is becoming more and more meaningless to consider digital assets 'the wild west'. Additionally, with the traceability of digital currencies cash will continue to remain more useful to criminals and for money laundering and terrorist financing.
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