During her Senate confirmation yesterday, incoming U.S. Secretary of the Treasury Janet Yellen raised concerns around the use of cryptocurrencies in criminal financing and money laundering.
The reality, however, is far from her assumptions. Despite widespread concerns about cryptocurrency’s use in illegal activity, cryptocurrency is actually being used for illicit purposes less often than ever before.
Blockchain analytics firm Chainalysis tracked more than $20 billion of illicit crypto transactions in 2019, an amount that accounted for approximately 2.1% of all transacted value that year.
That number fell in 2020, both in an absolute and relative sense. Last year, just $10 billion worth of cryptocurrency was used in illegal transactions. That amount represented just 0.3% of all cryptocurrency activity over the course of the year.
The source of this data is one that the U.S. government should be amenable to, as Chainalysis is one of the firms that it relies upon most heavily. It was with Chainalysis’s services that law enforcement was able to seize over a billion dollars worth of Bitcoin. The government has also used its services to discover tax evasion.
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Janet Yellen, however, is still under the impression that Bitcoin and crypto are mainly used for illegal activity, consistent with her previous statements that expressed opposition to crypto.
The reality of the situation, however, has transformed enormously over the past several years. It is questionable whether more extreme restrictions on cryptocurrency are needed at this point.
Disclosure: The author held Bitcoin at the time of publication.
