Percentage of illegal crypto transactions declines

Last Updated: 15 June 2022

The percentage of illegal crypto transactions has decreased in the year 2021 and the first quarter of 2022. Blockchain analysis company CipherTrace has published a new research report in which it has come to this positive conclusion.

For years, the crypto market has been the subject of much criticism, but year on year the number of criminal transactions involving bitcoin and other crypto currencies appears to be decreasing. More and more criminals seem to be coming to the conclusion that the public transaction history of cryptocurrencies does not make it easy to get money out of the system.

Decrease of approximately 77 percent

Overall, the percentage of criminal transactions involving crypto-currencies from the period 2020 to 2021 and the first quarter of 2022 decreased by about 70 percent. According to CipherTrace’s estimates, illegal activities still accounted for between 0.62 per cent and 0.65 per cent of the total volume in 2020. In 2021, that percentage fell to between 0.10 and 0.15 per cent.

Of course, this should also take into account that the total volume has grown considerably from 2020 to 2021. However, the most important thing is to look at the percentages and compare them with the traditional financial circuit. Since the year 200, the world’s largest banks have had to deal with more than USD 336 billion (EUR 320 billion) in fines. That is a figure almost as large as the total market cap of bitcoin, and that probably does not even cover all the abuses.

With the publication of such figures, it is at least a lot harder to label bitcoin as a tool for criminals. Ultimately, criminals also need fiat money to make their purchases. To buy a house, for example, those bitcoin must enter the traditional financial system. Often, criminals run into trouble while trying to find their way out. It is likely that the popularity of crypto for illegal transactions will also decline for this reason.

Industry growth contributes to security

The tremendous growth that bitcoin and the rest of the industry have experienced in recent years also contributes to these numbers, according to CipherTrace. As the industry grows, so does the scrutiny from authorities. All over the world, more and more regulations and regulators are gathering knowledge about crypto. Armed with this knowledge, they ensure that crypto does not turn into a modern version of the Wild West.

For evidence of this increasing level of oversight, we need only look to America. There, President Joe Biden not long ago issued a so-called executive order to investigate blockchain technology and the dangers associated with it. That the President of the United States considers the subject important enough for large-scale investigation says a lot about the changed status of bitcoin and the rest of the industry.

In the Netherlands, crypto companies have also been obliged to register with the Dutch Central Bank for some time. In order to obtain that registration, companies must meet all sorts of conditions that benefit the security of the industry. All these rules are perhaps not entirely in line with how Satoshi Nakamoto once intended bitcoin, but it does ensure a decrease in unauthorized transactions with crypto.

  • Steven Gray

    Steven Gray is a journalist with a heart for crypto. He filters the wide range of news and ensures that it reaches the public in a comprehensible way. He often does this with the support of technical analysis.

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