In early March, the US Treasury Department released a triennial report on money laundering and criminal activities. And the report pointed out that the use of the dollar in these activities is higher than cryptocurrencies.
The report has an entire category called “Virtual Assets” in which it talks about BTC and other cryptocurrencies. And they confirmed that both fiat currencies and traditional payment networks are mostly used for crimes. In this sense, the dollar also falls into this category.
Money laundering with cryptocurrencies
At first, the triennial report presents virtual assets as an evolution in terms of money laundering. That is, they do not rule out that crimes are committed in these markets, and also highlights technologies that increase the anonymity of transactions. Decentralized finance (DeFi) was highlighted.
Likewise, phishing attacks and ransomware scams were highlighted, especially after the onset of the Covid-19 pandemic. As of October 25, 2021, the Department of Justice has apprehended 984 defendants in around 682 cryptocurrency fraud cases. The cases involved more than $753 million in crimes.
Overall, the report states that the use of cryptocurrencies as a method of money laundering is growing. The data corroborates the results of a report by Chainalysis, which highlights an increase in the amount of cryptocurrencies in the hands of “criminal whales”.
However, increases in cryptocurrency crimes are still in the minority. In that vein, the Treasury Department admits that Fiat currency is still king when it comes to criminal money.
“The use of virtual assets for money laundering remains far below fiat currencies and more traditional methods,” the report states.
Furthermore, while cryptocurrency crimes are growing in absolute numbers, the relative share continues to decline. According to the report, only 0.15% of all cryptocurrency transactions carried out in 2021 were criminal. This figure was the lowest in history, against 0.62% in 2020 and 3.37% in 2019.
Are Cryptocurrencies Effective for Crime?
The report not only highlights the downward trend in cryptocurrency transactions, but debunks the idea that cryptocurrencies are an easy medium for criminals. In fact, the Treasury Department says it’s a double-edged tool.
On the one hand, peer-to-peer (P2) transactions and self-custodial wallets can help users circumvent financial controls. On the other hand, most blockchains – including BTC – are very transparent, which ends up making life difficult for criminals.