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Home»BITCOIN NEWS»Proven cryptocurrency legitimacy: Almost 100% of on-chain cryptocurrencies are legal.
BITCOIN NEWS

Proven cryptocurrency legitimacy: Almost 100% of on-chain cryptocurrencies are legal.

By Crypto FlexsJanuary 22, 20243 Mins Read
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Proven cryptocurrency legitimacy: Almost 100% of on-chain cryptocurrencies are legal.
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According to a recent cryptocurrency crime report from blockchain analytics company Chainalytic, the majority (about 99.6%) of cryptocurrency transactions are used for legal purposes. This research sheds light on the evolving cryptocurrency landscape and challenges widespread narratives surrounding illicit activity in the cryptocurrency space.

According to the report, the total value of cryptocurrency sent to illicit addresses decreased significantly from $39.6 billion in 2022 to $24.2 billion in 2023. The 2022 figure is partly inflated by the $8.7 billion in FTX creditor claims following the Sam Bankman collapse. A startup led by Freed.

Cryptocurrency is legal, Chainalysis says.

According to a survey released by Chainalysis, illegal cryptocurrency trading accounted for only 0.34% of the total cryptocurrency trading volume in 2023, a significant decrease from 0.42% in 2022 and 1.3% in 2019.

These figures come from JPMorgan Chase & Co., which has expressed concerns about the role of cryptocurrencies in illicit activities such as tax avoidance, money laundering and terrorist financing. We challenge the public statements of influential business leaders like CEO Jamie Dimon.

Cryptocurrency fans, including Edward Snowden, scoffed at Dimon for taking an overly dramatic stance.

wild how @SECGov approval #Bitcoin ETFs were all it took to transform CEOs. @JPMorgan From the King of Money to a man who spends half of every interview claiming “I don’t care about Bitcoin” and the other half sobbing about stealing his wife and shooting his dog.

— Edward Snowden (@Snowden) January 17, 2024

However, it is important to note that Chainalytic figures do not include funds derived from non-crypto crime, potential market manipulation, or funds involved in cryptocurrency money laundering.

The report only focused on funds stolen in cryptocurrency hacks and funds delivered to addresses identified as illegitimate.

Despite this decline, it is worth emphasizing that cryptocurrency-related crime is still small compared to illegal activity within the wider financial industry.

Total crypto market cap at $1.12 trillion on the weekend chart: TradingView.com

According to Nasdaq’s recently released Global Financial Crime Report, it is estimated that more than $3.1 trillion in illicit funds will be distributed through the global financial system in 2023. In particular, drug trafficking accounted for $782.9 billion, human trafficking accounted for $346.7 billion, and terrorist financing accounted for $11.5 billion.

Bitcoin-related crime declines

The Chainalysis report also highlights the evolving trend of using cryptocurrencies for illicit purposes. Bitcoin remained the main cryptocurrency used by cybercriminals until 2021 due to its high liquidity characteristics, but illicit trading volumes have been steadily declining over the past five years.

Bitcoin's volume in illicit transactions has been consistently down over the past five years. Image: Freepik

Instead, stablecoins like Tether have emerged as major players in both legal and illicit activities within the cryptocurrency market.

The rise of stablecoins in illicit transactions highlights the need for continued vigilance and regulatory action to address potential risks. It is important for authorities, industry players, and law enforcement to be actively involved in identifying and mitigating illegal activity while fostering innovation and growth within the cryptocurrency sector.

Overall, the Chainalytic report provides valuable insight into the state of cryptocurrency transactions and shows that the overwhelming majority are conducted for legal purposes.

Reduction in illicit use represents progress in building a more secure and compliant cryptocurrency ecosystem. However, the report is a reminder that ongoing efforts are needed to address potential risks and ensure responsible use of cryptocurrencies in an increasingly digital financial environment.

Featured image from Freepik

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