Crypto Is Legit, Nearly 100% Of Cryptocurrency On-Chain Is Legal – Chainalysis
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Crypto Is Legit, Nearly 100% Of Cryptocurrency On-Chain Is Legal – Chainalysis

A recent crypto crime report by blockchain analytics firm Chainalysis has revealed that the vast majority of cryptocurrency on-chain transactions, approximately 99.6%, are used for legal purposes. 

The study sheds light on the evolving landscape of cryptocurrency usage and challenges prevailing narratives surrounding illicit activities in the crypto space.

According to the report, the total value of cryptocurrency sent to illicit addresses witnessed a significant decrease from $39.6 billion in 2022 to $24.2 billion in 2023. 

The 2022 figure was partly inflated by $8.7 billion in FTX creditor claims following the collapse of the Sam Bankman-Fried-led startup.

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Crypto Is Legit, Chainalysis Says

The findings presented by Chainalysis indicate that illicit cryptocurrency transactions accounted for just 0.34% of all cryptocurrency volume in 2023, down from 0.42% in 2022 and a substantial decline from 1.3% in 2019.

These figures challenge public statements made by influential business leaders, such as JPMorgan Chase & Co. CEO Jamie Dimon, who has expressed concerns about cryptocurrency’s role in illegal activities like tax avoidance, money laundering, and terrorism financing.

Crypto fans, including Edward Snowden, laughed Dimon off for what they saw as an overly dramatic stance.

However, it is important to note that the Chainalysis figures do not encompass funds derived from non-crypto native crime, potential market manipulation, or funds associated with crypto money laundering.

The report focuses solely on funds stolen in crypto hacks and those directed to addresses identified as illicit.

Despite the decline, it is worth highlighting that cryptocurrency-related crime remains small in comparison to illicit activities within the broader financial industry.

The most recent Global Financial Crime Report by Nasdaq estimates that over $3.1 trillion in illicit funds circulated through the global financial system in 2023. 

Notably, drug trafficking accounted for $782.9 billion, human trafficking for $346.7 billion, and terrorist financing for $11.5 billion.

Bitcoin-Related Crimes Dropping

The Chainalysis report also sheds light on the evolving trends in cryptocurrency usage for illicit purposes. 

While Bitcoin had been the leading cryptocurrency used by cybercriminals until 2021 due to its high liquidity nature, its volume in illicit transactions has been consistently decreasing over the past five years.

In its place, stablecoins, such as Tether, have emerged as prominent players in both legitimate and illicit activities within the cryptocurrency market.

The rise of stablecoins in illicit transactions highlights the need for continued vigilance and regulatory measures to address potential risks. 

It is crucial for authorities, industry players, and law enforcement agencies to remain proactive in identifying and mitigating illicit activities while simultaneously fostering innovation and growth within the cryptocurrency sector.

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Overall, the Chainalysis report provides valuable insights into the state of cryptocurrency transactions, revealing that the overwhelming majority are conducted for legal purposes.

The decline in illicit usage signifies progress in building a more secure and compliant crypto ecosystem. 

However, the report serves as a reminder that ongoing efforts are necessary to address potential risks and ensure the responsible use of cryptocurrencies in an increasingly digital financial landscape.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.