Global crypto adoption accelerated in 2021, but some instances of cryptocurrency-related criminality negatively lit the sector. According to a new analysis, illegal use of cryptocurrencies will decline globally as more governments learn to utilize blockchain’s unfettered transparency.
Blockchain is a decentralized technology that stores data across a network of computers, creating the world’s first digital currency. This technology has many uses, but the most famous use case is Bitcoin and .
Blockchain is the primary technology that powers cryptocurrencies such as Bitcoin and Ethereum. According to the findings of a study conducted by the research firm Chainalysis, the increase of lawful cryptocurrency use is “far surpassing the growth of its criminal use.”
Criminal activity using cryptocurrencies reached an all-time high in 2021, with unlawful addresses receiving a total of $14 billion in a year, an increase from $7.8 billion in the previous year.
Total transaction volume across all cryptocurrencies tracked by Chainalysis climbed to $15.8 trillion in 2021, up 567 percent from totals in 2020.
With rapid crypto adoption, it is no surprise that fraudsters are embracing cryptocurrency. What’s most surprising is that the increase was only 79%, almost an order of magnitude smaller than overall adoption.
During the first quarter of 2021, transactions involving unlawful addresses accounted for only 0.15 percent of the total cryptocurrency transaction volume.
Many governments have voiced concern about the illegal usage of crypto-assets since they are decentralized and untraceable. Consequences of probable crypto-misuses include money laundering and terrorism financing.
The study goes on to say that law enforcement agencies have increased their efforts to bust and stop criminals from utilizing cryptocurrencies for their own gain.
E.g., the IRS reported in November 2021 that it had seized over $3.5 billion in bitcoin in non-tax investigations. Over that time span, the division seized $93 million.
Chainalysis projected last year that cryptocurrency-related schemes defraud investors of over $7.7 billion in 2021.