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As reported by CipherTrace, the use of illegal cryptocurrencies in 2021 and the first quarter of 2022 has decreased as a percentage of total cryptocurrency activity.
The cryptocurrency industry has long been well known in some jurisdictions as a haven for illegal activities. However, CipherTrace estimates that illegal activity accounts for between 0.62% and 0.65% of total cryptocurrency activity by 2020. The company reports that this rate has now fallen from 0.10% to 0.15% by 2021.
In its "Crypto Crime and Anti-Money Laundering" report published June 13, CipherTrace pointed out that the top ten decentralized financial attacks (DeFi) in 2021 and Q1 2022 earned the attackers $2.4 billion.
According to Kyckr, anti-money laundering (AML) penalties in the banking sector have increased significantly, with 80 institutions fined in 2021, compared to only 24 in 2020.
Government agencies make efforts to regulate cryptocurrencies
The cryptocurrency ecosystem is expanding rapidly. Total cryptocurrency market activity in 2020 is about $4.3 trillion.In the first half of 2021 alone, this figure has risen to about $16 trillion.
Some of the key events cited in the report include U.S. President Biden's cryptocurrency executive order in March to study blockchain technology, Dubai's establishment of a virtual assets regulator, and anti-money laundering laws proposed by the European Union.
Organizations added to CipherTrace will have "incentives to shape" or face "heavy losses imposed by the government." The threats that exist in cryptocurrencies will be at the heart of future regulatory efforts.
