By The latest central bank of a nation to express interest in crypto regulation is none other than The Dutch Central Bank aka De Nederlandsche Bank. They want to regulate all crypto companies by making it a requirement for them to obtain licenses in order to continue operating.
The central bank claims that regulation will aid in the reduction of money laundering as well as the use of digital currencies for terrorism funding, according to a short piece which was published in the De Telegraaf, a local daily newspaper. In order for cryptocurrency companies to qualify for a license, they need to report any “unusual transactions” as well as know exactly who their clientele is.
De Nederlandsche Bank said this regulation is necessary due to the decentralized, anonymous nature of the crypto space which of course makes it the ideal playground for illicit activities, IE money laundering.
Crypto Exchanges Implicated In Money Laundering:
According to a specific investigation, more than a whopping $88 million was laundered across 46 crypto exchanges around the world in the past two years.
ShapeShift AG, who have roots in Switzerland, but also their base of operations in the USA, allegedly processed more than $9 million in illicit funds since two years ago. This altcoin exchange service in the past allowed customers to trade BTC and other currencies anonymously but has since adopted the standard KYC.
In a similar fashion, Backpage, a classified style, sex advertising website used crypto exchanges in order to launder millions of dollars in BTC. In a massive 93 page federal indictment, the US Department of Justice accused the sex marketplace of money laundering, conspiracy, and facilitating prostitution and ultimately shut down the site earlier this year in April amid shocking revelations that it promoted sex trafficking and underage prostitution since it’s inception 14 years ago in 2004.
Sex Website Found To Have Laundered Millions of BTC:
The Justice Department also discovered that the website had been behind the laundering of tens of millions of dollars by use of digital currencies. The Justice Department claimed:
“Backpage furthered its money laundering through the use of bitcoin processing companies. Over time, Backpage utilized companies such as Coinbase, GoCoin, Paxful, Kraken and Crypto Capital to receive payments from customers and/or route money through the accounts of third parties.”
It’s clear as a result of these high-profile busts on money laundering within the crypto space, that many regulators around the world remain distrustful of the decentralized and anonymous cryptocurrency sector.
CEO of the Federal Reserve Bank of New York, John Williams, explicitly stated that it’s due to the crypto space’s constant woes with scams which are hampering its chances at mass adoption.
Williams stated:
“The setup or institutional arrangement around bitcoin and other cryptocurrencies [is problematic], they have problems with fraud, problems with money laundering and terror financing.”
Crypto-related Illegal Activities Are Often Blown Out Of Proportion:
With all that being said about laundering in the crypto space, it must be noted that the fiat world has for decades also been susceptible to money laundering. Earlier this year in April, the office of Quebec Chief Scientist Rémi Quirion released a report which concluded that bitcoin is wrongly blamed as a common vehicle for money laundering & illicit activities because the facts don’t support these claims.
The report read:
“Bitcoin is not above the law, nor is it a magnet for illicit transactions: it forms only a tiny part of the criminal money circulating around the planet. The reason: it is less attractive for anyone who wants to make transactions without leaving a trace.”
In a similar fashion, in January 2018, a report published by Elliptic, a blockchain analytics company, revealed that less than 1% of all bitcoin-related activities which were conducted between 2013 and 2016 actually involved money laundering or illegal activities.
The Elliptic report stated:
“Bitcoin’s illicit use is mainly based on anecdotal evidence, usually without supporting data analysis of how it is used across geographical regions, or trends over time.”
Another nation seeking regulation for the cryptocurrency sector. Is this what the industry needs? Or something that Satoshi Nakamoto set out to avoid in the first place? Let us know your thoughts by commenting below.
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