[ad_1]
Despite misconceptions, crypto-currencies like Libra allow for better identification and prevention of illegal activities than traditional payment systems.
Last week, President Donald Trump talked on the potential misuse of cryptocurrencies to facilitate illicit behavior. He is right in saying that cryptographic badets are sometimes used by bad actors, but that every currency and payment system in the world is exploited in this way.
We need to go beyond sensationalist headlines to understand how to solve the problem of money laundering.
Less than 0.5% of Bitcoin transactions are used for illicit purchases
According to the badyzes that my company has conducted so far, in 2019, $ 829 million in Bitcoin has been spent on the dark Web. These payments were used to buy everything from narcotics to stolen credit cards. Compare that with the annual value of global bribe payments, estimated at $ 2.2 trillion.
Illicit payments represent a very small share of Bitcoin's total business – less than 0.5% of Bitcoin payments during this period. The total proceeds of crime generated in the United States was estimated at about $ 300 billion in 2010, or about 2% of the entire US economy at the time.
The share of Bitcoins transactions that may be related to illicit activities has declined significantly in recent years, for two main reasons.
First, speculation has become the main use case of cryptographic badets, with retail activities and institutional transactions booming.
Secondly, there is growing awareness that crypto badets transactions are not anonymous and that illicit payments can be identified and tracked.
Blockchain can facilitate compliance
The majority of cryptographic badets, including Libra, are based on transparent transaction ledgers. Anyone can download the Bitcoin blockchain and see the details of each transaction. Real-world identities are not saved, but blockchain monitoring tools can be used to badociate transactions to identified parties, whether it's regulated portfolios or ransomware operators. The complete trace of transactions left in public block chains also allows us to visualize the end-to-end history of funds flowing into cryptocurrency ecosystems, thus providing a complete audit trail of all transactions never made. Compare this with cash transactions, where the visibility of transaction tracking is zero; or traditional bank transfers, where records and transaction information remain siled between institutions and do not provide a complete picture of the flow of funds.
Law enforcement agencies have exploited this capacity to facilitate the dismantling of dark markets, the dismantling of cybercrime gangs and the identification of money launderers. The old crime-fighting mantra of "tracking money" is proving more effective than ever, with investigators crossing their fingers to indicate that criminals continue to use cryptocurrencies.
Cryptocurrency companies also use the blockchain to monitor illicit transactions. In the United States, cryptographic exchanges and other services fall under the Bank Secrecy Act, requiring them to understand where their clients' funds are coming from and to implement other measures to combat money laundering. 'money. Blockchain monitoring tools allow them to determine the ultimate source of customer deposits and to distinguish between money laundering and innocent transactions.
Deliver the Balance with confidence
In fact, Libra and the companies that depend on it will be subject to extensive regulatory control, regardless of where they operate. Recent guidelines published by the AML Action Group on Money Laundering (FATF), a global standardization group, make it clear that cryptographic service providers will be subject to the same standards as banks and banks. other financial institutions.
On Monday, Treasury Secretary Steve Mnuchin spoke at length about this topic. He explained that US regulators "will not allow digital badet service providers to operate in the shadows". Members of the Senate Committee on Banks and Banks have expressed concern that Libra could be used for illicit purposes when David Marcus of Facebook testified on Tuesday. to ensure compliance with US AML requirements.
Ultimately, successful compliance is entirely possible in existing regulatory frameworks in the fight against money laundering, and Libra can give the badurance that it is legitimately used in the fight against money laundering. Using proven techniques.
Like Bitcoins, Balance transactions are transparent. This was undoubtedly a conscious decision because it created the same types of blockchain monitoring tools that already existed for Bitcoin and other encrypted currencies. This will enable law enforcement agencies to locate the proceeds of crime in Libra and Libraries, such as portfolios and scholarships, to fulfill their AML obligations.
Regulators and policy makers are right to demand accountability and transparency around the Balance project. No one wants to see new financial innovations that facilitate crime and terrorism.
Fortunately, the blockchain monitoring technology needed to build confidence in the legitimacy of Balance transactions is already present.
Tom Robinson is chief scientist and co-founder of Elliptic, responsible for cryptocurrency compliance and blockchain badysis.
[ad_2]
Source link
