Crypto crime struck a record high in 2021: Chainalysis
07:37, 7 January 2022
Cryptocurrency-based crime hit an all-time high in 2021, according to data available with blockchain research platform Chainalysis.
As much as $14bn (€12.4bn) was routed to illicit addresses over the course of the past year, up from $7.8bn in 2020, per data made public on 6 January.
On the flip side, with investors flocking to digital assets like bitcoin, the cumulative transaction value of all the virtual currencies tracked by Chainalysis rose to $15.8trn in 2021, up 567% from 2020’s levels.
“Given that roaring adoption, it’s no surprise that more cybercriminals are using cryptocurrency,” said the authors of the report.
Rise of theft and criminal holdings
Cryptocurrency theft surged in 2021, with about $3.2bn worth of digital currency stolen last year, a 516% increase over 2020.
Illicit addresses now hold around $10bn worth of digital currency, with the vast majority of this held by wallets associated with cryptocurrency theft. Addresses associated with darknet markets and with scams also contributed significantly to the abovementioned figure.
But, “much of this value comes not from the initial amount derived from criminal activity, but from subsequent price increases of the crypto assets held,” the authors noted.
Moreover, transactions involving illicit addresses accounted for just 0.15% of cryptocurrency transaction volume last year, in spite of the sheer “value of illicit transaction volumes reaching its highest level ever,” they added.
Policymakers scrambling to catch up
Policymakers in several nations are working with regulators to understand the evolving virtual currency market, its risks and rewards.
But “some emerging markets and developing economies face more immediate and acute risks of currency substitution through crypto assets, the so-called cryptoisation”, said a December 2021 post published on the International Monetary Fund’s (IMF) official blog.
“There is an urgent need for cross-border collaboration and cooperation to address the technological, legal, regulatory, and supervisory challenges. Setting up a comprehensive, consistent, and coordinated regulatory approach to crypto is a daunting task,” Tobias Adrian, Dong He and Aditya Narain wrote in the post.
“But if we start now, we can achieve the policy goal of maintaining financial stability while benefiting from the benefits that the underlying technological innovations bring.”
Read more: Three trends to watch as crypto goes mainstream
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