In recent years, Bitcoin has been often labeled by mainstream media as a currency primarily used for shady dealings on the internet. However, a new study by Chainalysis, a blockchain analysis firm, is challenging this perception. The report reveals a significant shift in the landscape of cryptocurrency-related crime.
The Rise of Stablecoins in Illegal Activities
Chainalysis’ findings show a notable change in the patterns of illegal cryptocurrency transactions. While Bitcoin was the most popular choice among criminals from 2018 to 2021, the situation has dramatically shifted in the past two years. In 2022 and 2023, a majority of illicit transactions were conducted using stablecoins rather than Bitcoin.
Reasons Behind the Shift
This shift coincides with the overall increase in the use of stablecoins. Fraudsters, in particular, are increasingly turning to stablecoins for their activities. The report also highlights that stablecoins are becoming a preferred tool for transactions related to entities sanctioned by the U.S. government.
Sanction Evasion and Digital Currencies
A significant portion of these illegal transactions involves crypto service providers previously sanctioned by U.S. Treasury regulatory bodies. Often, these providers continue operations from locations where U.S. sanctions are difficult to enforce. The U.S. currently has comprehensive sanctions against five countries (Russia, Iran, Syria, Cuba, North Korea) and partial sanctions against about a dozen more. However, the digital age seems to be limiting the effectiveness of these sanctions.
Tether’s Role in South East Asia
A recent United Nations report mentioned that Tether, a major stablecoin, plays a significant role in illegal activities in Southeast Asia. Tether’s issuer responded by expressing disappointment over being singled out arbitrarily.
Positive Trends in the Crypto World
Despite these concerns, Chainalysis also reported some positive trends. For instance, income from crypto hacks decreased by 54.3%, and profits from crypto scams fell by 29.2%. Consequently, there was a decline in transaction volume linked to illegal addresses.
The Chainalysis report paints a complex picture of the evolving world of cryptocurrency and its use in illegal activities. While the focus has shifted from Bitcoin to stablecoins in recent years, it is also encouraging to see a general decrease in criminal profits and hack-related revenues in the crypto space. This indicates an ongoing evolution in both the use and regulation of digital currencies.
