In a recent blockchain analytics firm Chainalysis report, a significant revelation challenges prevailing narratives surrounding crypto’s association with illicit activities. The study undermines concerns voiced by influential figures, including JPMorgan Chase & Co. CEO Jamie Dimon, suggesting that crypto facilitates illegal activities like tax avoidance, money laundering, and terrorism financing. Contrary to these apprehensions, the report highlights a notable decrease in illicit transactions within the crypto space.

Let’s find out more details about the Chainalysis report in this blog.

Decrease in Illicit Transactions:

According to Chainalysis, the total value of crypto sent to illicit addresses witnessed a substantial decline from $39.6 billion in 2022 to $24.2 billion in 2023. The 2022 figure was partly inflated due to $8.7 billion in FTX creditor claims following the collapse of Sam Bankman-Fried’s startup. This marks a noteworthy reduction in illicit activity within the crypto ecosystem. The findings reveal that illicit crypto transactions accounted for just 0.34% of all crypto volume in 2023, down from 0.42% in 2022 and a significant drop from 1.3% in 2019.

Challenging Public Statements:

The report’s findings directly challenge public statements made by prominent figures such as Jamie Dimon. Despite concerns expressed by some business leaders and critics, the data suggests that crypto-related crime is not as widespread as previously thought. It’s crucial to note that the figures in the Chainalysis report focus exclusively on funds stolen in crypto hacks and those directed to addresses identified as illicit.

Comparison With the Broader Financial Industry:

Despite the decline in crypto-related crime, it remains relatively small compared to illicit activities within the broader financial industry. The Global Financial Crime Report by Nasdaq estimates that over $3.1 trillion in illicit funds circulated through the global financial system in 2023. Drug trafficking accounted for $782.9 billion, human trafficking for $346.7 billion, and terrorist financing for $11.5 billion. These figures underscore that crypto-related crime is just a fraction of the larger global illicit finance landscape.

Evolving Trends in Crypto Usage:

The Chainalysis report also sheds light on the changing trends in crypto usage for illicit purposes. While Bitcoin had been the leading crypto used by cybercriminals until 2021 due to its high liquidity, its volume in illicit transactions has consistently decreased over the past five years. In its place, stablecoins, such as Tether, have emerged as prominent players in both legitimate and illicit crypto activities.

Conclusion

In conclusion, the Chainalysis report provides compelling evidence challenging negative perceptions surrounding crypto and its alleged ties to illicit activities. The decreasing prevalence of crypto-related crime and the evolving trends in usage suggest that the industry is actively adapting and maturing. As the sector continues to develop, it becomes crucial to base assessments on accurate data to foster a better understanding of the role cryptos play in today’s financial landscape.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.