How will crypto-currency aid money laundering markets in the future?
Money laundering has been a problem. How might cryptocurrency only help in the future?
Money laundering has been a night mare in the financial sectors. Every year, billions of dollars are lost or rather stolen through money laundering; statistics argue that money laundering cases have increased over the past decade. Without fear of contradiction, money laundering has been greatly influenced by the changing technology.
The internet has been one of the widely used by money launders, and the situation might become worse with the emerging online currencies. Crypto-currency is probably the latest invention in the financial sector, the virtual currency has already proved her feasibility, and the impact on the global economy and currencies is already evident. While some people are happy for the invention, the federal banks have been left to scratch their heads, since the anticipated challenges and dangers that might come along with crypto-currencies are enormous. One of the major dilemma that has been associated with the rise of crypto currencies is money laundering; the dilemma emerges from the complex and indifferent way cryptocurrencies work.
Over the past, central banks have been on the frontline in fighting money laundering. Their success and operations towards reducing money laundering of the real currencies has been due to their power to regulate how currencies operate and circulate. Federal banks regulate what banks can do through implementing policies, they are also the legislators are solely allowed to issue currencies. They are like a central eye that observes how money associates with economic forces, and importantly prevent illegal activities from happening. The crypto-currencies have a new and different structure, unlike real money, crypto-currencies are decentralized, and they do not depend on a central body. This makes controlling or rather regulating them to be very hard, in fact, the value and issuance of virtual currencies is not owned by a particular body, but rather they are because of the market operation, and they adjust depending on the status of the market.
Not everything about crypto-currency is all good, and just like the internet was anticipated to bring many benefits, it has also been a channel for cyber criminals. Over the recent past, crypto-currencies, such as Bitcoin has been feared to have provided a perfect platform for illegal trade activities to take place and help money launders escape easily from authorities. Scholars argue that the decentralized nature of crypto currencies might pave way for illegal markets to emerge. Silk Road is a great example of how money laundering can impact the economy, reports show that over 24000 illegal products were sold through the dark web. In 2013, the Silk Road was shut down, and over $28.5 million worth of Bitcoin seized, the revenue from the Silk Road was approximated to have been over $10 million.
Tax evasion and cybercrime have been other common forms of money laundering. Bitcoin popularity over the past few years, the stability of crypto currencies is probably becoming an assurance to traders and investors. However, crypto-currencies are based on peer-to-peer way of operation, and the owners are anonymous. This major issue might motivate tax evaders and cyber criminals to hide the money earned illegally in form of Bitcoin. In summary, crypto-currencies might aid money laundering activities, since the central agencies are not involved and the model of crypto currencies makes it hard to verify identity, thus making it a hiding place for money launders.