Crackdown on Crypto Crime Grows Amid Market Rebound

Over the past few days and weeks, regulators across the globe have doubled down on their efforts to prevent illicit activity enabled by transactions of Bitcoin
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The crypto market’s recovery, backed by a growing amount of retail interest (as evidenced by Google Trends data for the terms “Bitcoin” and “Buy Bitcoin“), hasn’t gone unnoticed by regulators.

Over the past few days and weeks, regulators across the globe have doubled down on their efforts to prevent illicit activity enabled by transactions of Bitcoin and other digital assets. Some of these novel efforts are as follows.

U.S. Budget Proposal: Crypto Oversight Should be Decreased

According to the official federal budget proposal for the fiscal year 2021, published just recently, the U.S. is seeking to expand its crypto enforcement activities by returning the United States Secret Service — which actually enforces many financial crimes in America — to the jurisdiction of the Treasury.

The budget proposal suggests that this move, which would alleviate the Secret Service from the Department of Homeland Security, will “create new efficiencies” in how the Service investigates potential criminal acts and will “prepare the Nation to face the threats of tomorrow.”

The document added that this move will also satisfy the Trump Administration’s intent to “address emerging threats, such as the use of cryptocurrencies in money laundering and terrorist financing.” The proposal continued:

Technological advancements in recent decades, such as cryptocurrencies and the increasing interconnectedness of the international financial marketplace, have resulted in more complex criminal organizations and revealed stronger links between financial and electronic crimes.

This move seemingly fulfills a promise made by Steven Mnuchin, the Treasury Secretary, in a number of interviews with mainstream media last year.

In the wake of Trump saying that he sees cryptocurrency as a crime-enabler and as something with little inherent value, Mnuchin said that Bitcoin is a “national security issue,” for the cryptocurrency and its ilk have been “exploited to support billions of dollars of illicit activity like cyber crime, tax evasion, extortion, ransomware, illicit drugs, and human trafficking.”

Switzerland’s Finance Authority Wants Better Crypto Rules

In a similar strain of news, the Swiss Financial Market Supervisory Authority (FINMA) has unveiled a plan that will put crypto actors under more of a spotlight moving forward.

The plan says that transactions valued at over 1,000 francs will require customers to submit KYC info, which is an 80% decrease from the current KYC limit of 5,000 francs. The organization backed this proposal by citing the percieved “heightened” risk of money laundering using cryptocurrency.

This move comes shortly after the European Union also implemented its Fifth Anti Money Laundering Directive, which actually had a large focus on cryptocurrencies. The 5AMLD effectively states that all crypto companies operating in Europe will be mandated to enforce KYC and AML requirements on their clients, likely slowing the adoption of cryptocurrencies by making it harder to get onboarded.

Criminals Are Still Loving Bitcoin

The renewed crackdown on crypto also comes after leading blockchain analysis firm Chainalysis released a key report, in which it revealed that there remain many criminals using primarily Bitcoin for illicit activity.

They found that the value of cryptocurrency spent on dark web markets, where individuals can buy items like fake identification and drugs, surged 60% to a “new high” of $601 million in Q4 of 2019. Chainalysis added that 1% of Bitcoin transactions are used for illicit activity — up from the around 0.5% seen in the year prior.

This trend was confirmed by the below chart from CoinDesk, in which they revealed that government agencies in the U.S. (the SEC, FBI, IRS, and so on and so forth) have been spending more and more on Chainalysis’ services over the years, implying a large increase in suspected cases of crypto crime.

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I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact

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