With Bitcoin recently turning 10, the question that what is the actual value of cryptocurrencies still remains.
Cryptocurrency easily gives the financial system a tough competition. Be it the seamless cross border payments or garnering support for the people not having a bank account, cryptocurrencies have come a long way. However, it is increasingly being used by dark web drug dealers, terror groups and hackers for payments.
Recently, a group of Australian crypto investors were defrauded of $2.7 million.
As per a Cambridge Study, there are about 140 million cryptocurrency user accounts registered worldwide. The number of users quadrupled in 2017 and doubled again in the first three quarters of 2018.
While cryptocurrencies are gaining global traction, the conversion to and fro raises several questions.
“Organised crime has well-established ways of money laundering but they, like other businesses, are experimenting with cryptocurrency,”
said Australian Strategic Policy Institute researcher Elise Thomas.
“I think we’re going to see interesting new ways to launder money which combine traditional finance and cryptocurrencies and that’s going to be a massive challenge for regulators because they’ll need teams of experts who understand both.”
The Financial Action Task Force, an international group that sets standards on anti-money laundering passed a regulation which made it compulsory for nations to register any cryptocurrency-related business and report any suspicious transactions.
A recent report from the Foundation for the Defence of Democracies on cryptocurrency noted:
“Technology has created a potential pathway to alternative financial value transfer systems outside, of US [-centred, Western] control.”
Impact on Western Financial System
While it is too early to discuss the potential impact on the Western financial system, Facebook’s plans to launch Libra has raised a huge hue and cry with US and global regulators. With nations like Russia, Venezuela and Iran suffering huge losses owing to corruption, the advent of national-cryptocurrencies is being sought as a measure to avoid Western sanctions, thus, raising the prospects of other forms of payment which are far from the regulatory realm of established economies and governments.