As cryptocurrency use cases increase, cryptocurrency-related crimes are becoming increasingly difficult to track, according to a new report.
As a new Chainalytic report reveals, cryptocurrency crime and investigations have become more complex and resource-intensive than regular criminal investigations. This adds to the critical role of public sector investigative agencies in the fight against cryptocurrency crime and highlights the urgent need for improved workforce and skills related to cryptocurrency.
Over the past decade, cryptocurrencies have emerged as a focus for law enforcement, regulators, and military agencies around the world, and that focus is only likely to grow. The agency is tasked with reducing the risks associated with cryptocurrencies in the public sector without completely eliminating their usefulness.
Surveys have shown that public sector employees generally view cryptocurrencies positively. Respondents in Latin America and Europe, the Middle East and Africa (EMEA) are optimistic about their position in financial markets, while those in Asia Pacific (APAC) are more skeptical.
Participants predicted an increase in cryptocurrency criminal activity over the next five years. They also predicted that more time would be needed to track and report investigations. About half of the participants also expressed dissatisfaction with their agency’s human and technical resources for investigating cryptocurrency-related crimes.
Awareness of Cryptocurrency
According to the survey, more than 50% of participants consider cryptocurrency a legitimate form of currency, with EMEA having the highest level of consideration at 72.4%.
However, most respondents believe that cryptocurrencies are mainly used by malicious actors such as criminals, especially in the APAC region, with 67.7% sharing this view.
“These instances of illicit use go beyond the forms of cybercrime we typically think of as cryptocurrency-based, such as ransomware and darknet markets, and include everything from intellectual property crime to traditional drug trafficking,” the report said.
Despite this perspective, many believe that the economic challenges driving financial innovation are likely to lead to the adoption of cryptocurrencies and impact traditional financial systems, especially in Latin America.
Cryptocurrencies under investigation
Most survey participants recognized the importance of cryptocurrencies across a variety of sectors. Respondents in APAC appear less confident than their counterparts in EMEA.
“Local tax authorities reported finding cryptocurrency artifacts the most in their investigations, at 45.3%,” the report said. “Military and defense respondents reported the lowest percentage at 19.0%, likely reflecting their primary focus on different types of threats and criminal activity.
The need for more cryptocurrency resources
Despite the diversity of expertise, respondents agreed that additional resources are essential for public sector organizations and should be provided for cryptocurrency research. Chainalytic’s main argument for this is that cryptocurrency-related cases generally take longer to resolve compared to traditional financial and non-financial crimes.
Respondents said they have seen widespread use of cryptocurrencies in fraud, fraud, cybercrime and drug-related crimes and that more resources could help investigate a variety of crimes. The EMEA region is reported to have the highest incidence.
“Overall, more than half of respondents said they were either extremely dissatisfied or somewhat dissatisfied with their agency’s human resources available for cryptocurrency research,” the report said.
U.S. respondents were generally satisfied with training opportunities, but less satisfied with human and technical resources.
Recommendation
To address these issues, the survey suggests agencies should increase staff dedicated to cryptocurrency investigations, develop specialized training programs, invest in technology to support investigations, and build partnerships with private sector organizations.
More than 800 public sector employees from around the world responded to the survey. Respondents from APAC accounted for 44.3% of all respondents, followed by North America at 18.1% and EMEA at 10.4%. About a quarter of respondents declined to share their location.