Criminal use of cryptocurrencies will decline as more countries adopt security measures in 2022: chain analysis

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2021 has witnessed global crypto expansion, but has been joined by multiple instances of crypto-related crimes that have cast the sector in a bad light. The criminal use of cryptocurrencies will decline around the world as more governments learn to take advantage of the uncensored transparency that blockchain offers, a new report claims. Blockchain is the underlying technology that powers cryptocurrencies. In its study, research firm Chainalysis found that the growth in legitimate use of cryptocurrencies “far outpaces the growth in its criminal use.”

Cryptocurrency-based crime hit a new all-time high in 2021, with illicit addresses taking in US$14 billion (about Rs.103,768 billion) over the year, up from US$7.8 billion (about Rs.57,813 billion) in 2020.

“Across all cryptocurrencies tracked by Chainalysis, total transaction volume grew to US$15.8 trillion (approximately Rs.11,71,09,600) in 2021, a 567 percent increase from 2020 totals. With this rapid adoption, it is no surprise that more and more cybercriminals are using cryptocurrencies. But the fact that the increase was only 79 percent — almost an order of magnitude lower than overall adoption — may come as the biggest surprise of all,” the report said.

Transactions with illegal addresses accounted for just 0.15 percent of cryptocurrency transaction volume in 2021.

Because crypto transactions are decentralized and untraceable, several government agencies around the world have raised concerns about the illicit use of crypto assets. From money laundering to terrorist financing, the potential abuse of the crypto sector has contributed to its delayed legalization.

The report has further highlighted that law enforcement agencies have increased their efforts to bust and stop criminals’ exploitation of cryptocurrencies.

In November 2021, for example, the US-based law enforcement agency Internal Revenue Service (IRS) announced that it had seized over $3.5 billion worth of cryptocurrency in 2021 — all from non-tax investigations. That number represented 93 percent of all funds seized by the department during that period.

Notwithstanding, the cryptocurrency market surged to US$3 trillion (approximately Rs.2,15,66,720 billion) in 2021, the highest it has hit so far.

In a report last year, Chainalysis revealed that cryptocurrency-related scams siphoned over $7.7 billion (around Rs. 58,697 billion) from investors in 2021.

Last year, the most common form of the scam was the classic rug pull, which this year raked in more than $2.8 billion (around Rs. 21,333 billion) worth of cryptocurrencies from victims.

Interested in Cryptocurrency? We discuss all things crypto with WazirX CEO Nischal Shetty and WeekendInvesting founder Alok Jain on Orbital, the Gadgets 360 Podcast. Orbital is available on Apple Podcasts, Google Podcasts, Spotify, Amazon Music and wherever you get your podcasts.

Cryptocurrency is an unregulated digital currency, not legal tender and is subject to market risks. The information provided in this article is not intended to and does not constitute financial advice, trading advice, or any other advice or recommendation of any kind offered or endorsed by NDTV. NDTV is not responsible for any loss arising from any investment made on an accepted recommendation, forecast or other information contained in this article.

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