Criminal Usage of Cryptocurrencies Will Drop as More Countries Adopt Security Measures in 2022: Chainalysis

2021 saw a global expansion in the cryptocurrency space, but with that came several cases of crypto-related crime that dragged the sector under a bad light. Criminal use of cryptocurrencies will decrease worldwide as more governments learn to take advantage of the uncensored transparency that blockchain provides, a new report claims. Blockchain is the underlying technology that powers cryptocurrencies. Research firm Chainalysis said in its study that the growth of legitimate use of cryptocurrencies “far outstrips the growth of criminal use.”

Crypto-based crime reached a new all-time high in 2021, with illicit addresses receiving $14 billion (about Rs 103,768 crore) over the course of the year, up from $7.8 billion (about Rs 57,813 crore) in 2020.

“Across all cryptocurrencies tracked by Chainalysis, total transaction volume grew to $15.8 trillion (about Rs 11.71.09,600 crore) in 2021, 567 percent more than the totals for 2020. Given this massive adoption, it is not surprising that more Cybercriminals are using cryptocurrency, but the fact that the increase was only 79 percent — nearly an order of magnitude lower than overall adoption — may be the biggest surprise of all,” the report said.

Transactions involving illicit addresses represented just 0.15 percent of the volume of cryptocurrency transactions in 2021.

Since crypto transactions are decentralized and untraceable in nature, many government authorities around the world have expressed concerns about illegal uses of crypto assets. From money laundering to terrorist financing, the potential abuse of the crypto sector has delayed legalization.

The report further highlighted that law enforcement agencies have intensified their efforts to control and stop the exploitation of cryptocurrency by criminals.

In November 2021, for example, the US Internal Revenue Service’s (IRS) Criminal Investigative Agency announced that it had seized more than $3.5 billion in cryptocurrency in 2021 — all from a non-tax investigation. The figure represented 93 percent of all funds acquired by the division during that time period.

Regardless, the cryptocurrency market soared to $3 trillion (about Rs 2,15,66,720 crore) in 2021, its highest level so far.

In a report last year, Chainalysis revealed that cryptocurrency-related scams took in more than $7.7 billion (about Rs 58,697 crore) from investors in 2021.

Last year, the most common form of scam was the classic rug pull, which took more than $2.8 billion (about Rs 21,333 crore) in cryptocurrency from victims this year.


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