Will Increasing Regulatory Scrutiny Reduce Bitcoin’s Criminal Uses and Encourage Adoption?
In the past, the public has largely viewed cryptocurrencies – and Bitcoin in particular – as tools widely used by criminals that provide them with unfettered anonymity while they facilitate nefarious transactions on the dark web. Although the public’s perception of BTC and other digital currencies may have been altered slightly after the 2017 bull run that sucked new participants into the markets, the stigma still remains.
Despite this, increasing regulatory scrutiny may begin reducing the amount of illicit transactions that cryptocurrencies facilitate, and increasing regulatory requirements for exchanges may nullify their use as money laundering tools.
Dark Web Bitcoin (BTC) Purchases Continue to Grow Steadily
Over the past several years, Bitcoin has been the currency of choice for those looking to make purchases on the dark web, and many critics of the cryptocurrency incessantly claim that without the dark web, BTC would lose the majority of its utility.
Although the massive progress the industry has made over the past several years certainly serves as a testament to the fact that cryptocurrencies have far more and greater use-cases than simply making anonymous purchases, those looking to make purchases on the dark and unregulated recesses of the internet are still relying heavily on Bitcoin.
Nathaniel Popper, a New York Times journalist, recently conducted and compiled research on the scale of Bitcoin’s dark web use, and explained in a recent thread of tweets that despite several promising use-cases for BTC and other cryptos, nefarious transactions are still a large driving factor behind their adoption.
“But there are things to worry about. While online payments using Bitcoin declined last year, Bitcoin purchases on the dark net grew steadily, according to data pulled together for us by Chainalysis. Transactions related to theft and hacking grew even faster,” Popper explained, referencing a chart that shows the significant amount of money being sent to dark net markets each month.
But there are things to worry about. While online payments using Bitcoin declined last year, Bitcoin purchases on the dark net grew steadily, according to data pulled together for us by Chainalysis. Transactions related to theft and hacking grew even faster. pic.twitter.com/jaqtUJYz2w
— Nathaniel Popper (@nathanielpopper) April 23, 2019
Could Increasing Regulatory Scrutiny Shift These Transactions to Legal Markets?
Until recently, most major online marketplaces have offered users services like PayPal to facilitate transactions, but as Bitcoin’s userbase continues to grow, it is highly likely that more sites will begin accepting it as a form of payment – as the transactions are rapid and it would eliminate the expensive fees and operational costs associated with accepting credit cards.
Increasing regulatory scrutiny of the nascent markets may help drive adoption, as these marketplaces may grow more apt to accept crypto if the stigma surrounding its status as a tool for criminal is removed.
Just today, New York announced its first conviction for money laundering using cryptocurrency, convicting two male defendants for laundering nearly $3 million in sales of controlled substances over the internet. The two men pled guilty to the charges and are now facing up to 7.5 years of jail time.
It is highly likely that cases like this one will become common place as states and federal governments begin cracking down on illicit activity involving cryptocurrency, which will slowly but surely remove the negative stigma surrounding the bourgeoning technology, and will make large consumer-based corporations more hastened to accept it as a form of payment.
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