Chainanlysis Report: Cryptocurrencies Are Clean, Nearly 100% of On-Chain Cryptocurrencies Are Legal

A recent cryptocurrency crime report released by blockchain analytics firm Chainanlysis reveals that the vast majority of cryptocurrency transactions (approximately 99.6%) are used for legitimate purposes. The study reveals the changing landscape of cryptocurrency use and challenges the prevailing narrative of illicit activity in the cryptocurrency space.

According to the report, the total value of cryptocurrencies sent to illicit addresses dropped significantly from $39.6 billion in 2022 to $24.2 billion in 2023. the 2022 figure was partially inflated by the $8.7 billion claimed by FTX creditors in the wake of Sam Bankman’s collapse. Fried led the startup.

According to the report, the total value of cryptocurrencies sent to illicit addresses fell from $39.6 billion in 2022 to $24.2 billion in 2023. the 2022 figure was partially inflated by FTX creditor claims amounting to $8.7 billion related to the aftermath of the collapse of the Sam Bankman-Fried-led start-up.

Chainalysis says cryptocurrencies are legal

Chainalysis’ findings suggest that illegal cryptocurrency trading volume will account for just 0.34% of all cryptocurrency trading volume in 2023, down from 0.42% in 2022 and down sharply from 1.3% in 2019.

These figures challenge public statements by influential business leaders such as JPMorgan Chase CEO Jamie Dimon, who have expressed concerns about the role of cryptocurrencies in illegal activities such as tax avoidance, money laundering and terrorist financing.

Cryptocurrency fans, including Edward Snowde, ridiculed Jamie Dimon’s overly dramatic stance.

However, it’s worth noting that Chainalysis’ data does not include funds from non-cryptocurrency homegrown crime, potential market manipulation, or money laundering related to cryptocurrencies.Litecoin DOGE Miner Asic

The report focuses only on funds stolen in cryptocurrency hacks and those identified with illicit addresses.

Despite the decline, it’s worth emphasizing that cryptocurrency-related crime remains small compared to illegal activity within the broader financial sector.

Total cryptocurrency market capitalization was $1.12 trillion in the weekend charts: hominers.com

Nasdaq’s latest Global Financial Crime Report estimates that by 2023, there will be more than $3.1 trillion of illicit money circulating in the global financial system. Notably, drug trafficking amounted to $782.9 billion, human trafficking to $346.7 billion and terrorism financing to $11.5 billion.

Bitcoin-Related Crime Declines

The Chainalysis report also reveals a changing trend in the use of cryptocurrencies for illicit purposes. Although Bitcoin was the primary cryptocurrency used by cybercriminals until 2021 due to its high liquidity, the volume of its illicit transactions has been steadily declining over the past five years.

Illegal transactions in Bitcoin have been declining over the past five years. Image by Freepik

In its place, stablecoins such as Tether have become significant players in both legal and illegal activity in the cryptocurrency market.

The rise of stablecoins in illegal trading highlights the need for continued vigilance and regulatory measures to address potential risks. It is critical for authorities, industry participants, and law enforcement agencies to remain proactive in identifying and mitigating illegal activity while promoting innovation and growth in the cryptocurrency industry.Bitmain Miner

Overall, the Chainalysis report provides valuable insights into the state of cryptocurrency trading, showing that the vast majority of transactions are conducted for legitimate purposes.

The decrease in illegal use signals progress in building a more secure and compliant crypto ecosystem. However, the report serves as a reminder of the need for ongoing efforts to address potential risks and ensure the responsible use of cryptocurrencies in an increasingly digitized financial environment.