Report Says Bitcoin Is Not a High Risk for Financial Crime

Cryptocurrencies have rattled regulators for many reasons. Blockchain technology has allowed transactions without the use of a third party.

And because of this, it has the power to disrupt how the financial sector operates. Next, there is a possibility that it can be used by criminals in order to launder money and in order to do other illicit activities. In effect, different countries tightened their rules and regulations when it comes to digital currencies. China, for instance, has completely banned crypto trading.

In 2017, Bitcoin was able to reach almost $20,000, thanks to the mainstream attention that it had. But after regulatory changes were applied during the early part of 2018, the entire crypto market had a bearish trend. There was even a point when Bitcoin was only trading at around $6,000. Today, cryptocurrency is trading at around $9,000.

However, is the crypto market really vulnerable to becoming a tool by those who want to evade their paying taxes and those who plan to launder money? In fact, Bill Gates believe that cryptocurrencies can be used for this purpose by criminals.

Not a High Risk

The Hong Kong Financial Services and Treasury (FSTB) released a report on April 30th reporting on money laundering and terrorism financing. Surprisingly, virtual currencies such as Bitcoin are not particularly involved in these crimes.

According to the FSTB, “There does not seem to be any visible impact affecting the overall risk in Hong Kong so far. The risk of VCs is assessed as medium-low”.

This is quite the opposite of what many expected considering the fact that Hong Kong’s suspicious transactions quadrupled in the last six years according to the 2017 of the Joint Financial Intelligence Unit.  In 2011, the figure was just at 20,287. On the other hand, in 2017, there were already 92,115 reports of transactions.

There were fears around Hong Kong when it comes to risks of money laundering. Businesses are already complaining that they are having a hard time even being denied of banking services on a large scale mainly because of this problem. And for this reason, it has also hit the crypto market quite bad.

Bitcoin Business Accounts Frozen

In November, Bitcoin entrepreneurs were forced to find another country other than Hong Kong in order open their bank accounts. Local banks froze and even closed Bitcoin entrepreneurs’ bank accounts.

Gatecoin marketing head Thomas Glucksmann even mentioned that “It was a major disruption to our business”. He added that “We had just tripled our customer base in a two to three month period, the price of bitcoin was rallying, the amount of money clients were depositing was increasing—the timing couldn’t have been worse”.

A Good Sign for Crypto Businesses?

This report surely confirms that there is no apparent sign that virtual currencies are being used by organized crimes. However, the report never included the possibility that Ponzi schemes are using the cryptocurrencies.

Since 2013, there were around 167 Bitcoin-related reports. Most of these cases were related to ransomware. However, it is worth mentioning that drug or smuggling offenses weren’t among those 167 Bitcoin-related cases. And the authorities also consider the risk of Bitcoin to be low.