A Majority of Cryptocurrency Transactions Are Legal, Says Chainalysis Report
A recent report by blockchain analytics firm Chainalysis reveals that approximately 99.6% of cryptocurrency transactions are used for legal purposes. The study challenges the prevailing narrative that cryptocurrencies are primarily associated with illicit activities.
The report shows a significant decrease in the value of cryptocurrency sent to illicit addresses, dropping from $39.6 billion in 2022 to $24.2 billion in 2023. The inflated 2022 figure was largely due to FTX creditor claims after the collapse of Sam Bankman-Fried’s startup.
Crypto Is Legit, According to Chainalysis
Chainalysis’ findings indicate that illicit cryptocurrency transactions only accounted for 0.34% of all cryptocurrency volume in 2023, down from 0.42% in 2022 and a substantial decline from 1.3% in 2019.
This challenges statements made by influential business leaders like JPMorgan Chase CEO Jamie Dimon, who have expressed concerns about cryptocurrencies being involved in illegal activities such as tax avoidance and money laundering.
Crypto enthusiasts, including Edward Snowden, have dismissed Dimon’s stance as overly dramatic.
Wild how the SEC approving a Bitcoin ETF was all it took to transform the CEO of JPMorgan from the King of Money into that guy who spends one half of every interview insisting “I don’t care about Bitcoin,” and the other half sobbing that it stole his wife and shot his dog.
— Edward Snowden (@Snowden) January 17, 2024
However, it is important to note that the Chainalysis figures do not include funds derived from non-crypto native crime or potential market manipulation. The report focuses solely on funds stolen in crypto hacks and those directed to illicit addresses.
While cryptocurrency-related crime has decreased, it remains relatively small compared to illicit activities in the broader financial industry.
The most recent Global Financial Crime Report by Nasdaq estimates that over $3.1 trillion in illicit funds circulated through the global financial system in 2023. Notably, drug trafficking accounted for $782.9 billion, human trafficking for $346.7 billion, and terrorist financing for $11.5 billion.
Bitcoin-Related Crimes on the Decline
The Chainalysis report also highlights the changing trends in cryptocurrency usage for illicit purposes. While Bitcoin was previously the leading cryptocurrency used by cybercriminals due to its liquidity, its volume in illicit transactions has consistently decreased over the past five years.
In its place, stablecoins like Tether have become prominent players in both legitimate and illicit activities within the cryptocurrency market.
The rise of stablecoins in illicit transactions underscores the need for continued vigilance and regulatory measures to address potential risks. Authorities, industry players, and law enforcement agencies must remain proactive in identifying and mitigating illicit activities while fostering innovation and growth within the crypto sector.
Overall, the Chainalysis report provides valuable insights into the state of cryptocurrency transactions, revealing that the majority are conducted for legal purposes. The decline in illicit usage signifies progress in building a more secure and compliant crypto ecosystem. However, ongoing efforts are necessary to address potential risks and ensure responsible use of cryptocurrencies in an increasingly digital financial landscape.
Hot Take: The Majority of Cryptocurrency Transactions Are Legal, Challenging Prevailing Narratives
A recent report by blockchain analytics firm Chainalysis reveals that approximately 99.6% of cryptocurrency transactions are used for legal purposes, challenging the prevailing narrative that cryptocurrencies are primarily associated with illicit activities. The study shows a significant decrease in the value of cryptocurrency sent to illicit addresses and highlights the declining role of Bitcoin in illicit transactions. Stablecoins like Tether have emerged as prominent players in both legitimate and illicit activities within the crypto market. While progress has been made in building a more secure and compliant crypto ecosystem, ongoing efforts are necessary to address potential risks and ensure responsible use of cryptocurrencies.
By
By
By
By