A recent report published by the pro-cryptocurrency lobbying group Crypto Council For Innovation and co-authored by former CIA deputy director Michael Morell analyzed the degree of illicit activity associated with Bitcoin and concluded that criminals will decreasingly leverage bitcoin to launder money.
The report, titled “An Analysis Of Bitcoin’s Use In Illicit Finance,” noted the fact that Bitcoin is pseudonymous (as opposed to completely anonymous) as a reason that other cryptocurrencies that better protect user privacy represent a “far larger” percent of total transaction volume for illicit activities than bitcoin.
Furthermore, it highlighted the fact that fiat currencies are often better tools for obscuring criminal activity than bitcoin is.
“A currently serving official at the [Commodity Futures Trading Commission] added that it ‘is easier for law enforcement to trace illicit activity using Bitcoin than it is to trace cross-border illegal activity using traditional banking transactions, and far easier than cash transactions,’” according to the report.
And, Despite the fact that some regulators and news outlets have highlighted the potential for cryptocurrencies like bitcoin to be used as media for financing terrorism, this report found the contrary.
“On the key issue of terrorist financing, [a] former CIA terrorism expert was quoted as saying that ‘the hype is much greater than the reality and that cryptocurrency is not yet an important platform for terrorist organizations,’” per the report.
Finally, the authors of the report asked themselves the question: “In light of the conclusions we have reached, why do we see such alarmist statements and articles about the threat posed by Bitcoin?”
Firstly, the authors attributed these statements to a lack of understanding of the technology behind Bitcoin, the propensity for “bad” news to drive perception and the fact that “Bitcoin and its decentralized nature seem to pose a disruptive threat to traditional financial institutions.”