The all-mighty premise
I think by now we have all seen the headlines which suggest that cryptocurrencies are used by criminals to hide their activities. The naive implication then being that all cryptos are bad and should be banned. Needless to say, this is the line trotted out on a regular basis by a mixed cast of supposedly concerned parties including government spokespeople, banking industry experts and numerous financial pundits.
These are then casually reinforced by seemingly innocent pop culture references (crime & police fiction on TV etc.) picked up on, believed and propagated by people in everyday discussions on the features and merits of digital currencies as if they were fact, regardless of any evidence.
The simple truth is that BAD PEOPLE TEND TO DO BAD THINGS
and when the objective is illicit wealth accumulation than nowhere is
entirely safe despite the best efforts of law enforcement. Conventional
wisdom deems that the unholy triumvirate of means, motive &
opportunity are required to ferment unlawfulness and whilst these exist
all over the financial world including within the digital asset
management sector are there any real grounds that make cryptos so
different that they should be condemned?
So where is the evidence
The biggest (and most public) case would probably be the fable of the Silk Road, a dark web network, allegedly fuelled by Bitcoin or similar, that was a veritable supermarket for drugs, arms, organs......you name it! Fact is that we may never know the truth of it but it was taken down by the FBI and people were prosecuted, fined and jailed. But the significant issue here is the acknowledgment that it wasn't so much the method of transaction but more the portfolio of traded items and their legality.
Then we have the oft-quoted use of cryptos to facilitate ransom payment including for pirate-held ships off the coast of Somalia. Whilst this would all make sense and be 'doable' technically, the purchase and transfer of vast quantities of cryptos would be problematic at best and nigh on impossible at worst, likewise the subsequent exchange for fiat. Far better to receive your unmarked dollar bills courtesy of an obliging insurance company and a small parachute.
Then we have the apochcryphal tales of people buying drugs via the net....much of the recent substance here relates to individuals trying to get CBD or similar for such things as pain relief, the treatment of autism and numerous other ailments within jurisdictions where such products are 'forbidden'. So we have private individuals seeking medication.....not drug gangs shifting tonnes of product! The fact that payment can be facilitated via cryptos in many cases is simply a by-product of the prevailing regulatory environment and hardly damning evidence of them facilitating criminality.
Show me the money
And let's be honest here, if you want to see criminality, drugs and money walking hand in hand down Main Street then you don't have to look any further than the tale of Perdue Pharmacueticals in the USA and their decades long drug pushing leading to millions becoming addicted to opiates with billions made followed by billions being paid in fines & penalties by the company but with the then key players avoiding direct sanction by declaring the corporation bankrupt!
And we've all heard of Pablo Escobar and Joaquim 'El Chapo' Guzman through the fictionalized retelling of the story of these infamous South American drug runners and what was always their favoured method of payment? US dollar bills! Filthy lucre! Piles and piles of it, so much they couldn't spend it all... Escobar is even rumoured to have used bundles of dollars to build a fire to provide warmth for his family as they fled the army through the jungle.
When I first started to look into cryptos several years ago, during the course of my research and discussions with people who were either in or watching or even out already I formed the opinion that there were three significant threats to the future development of the sector.
The first was the absence of any uniform or universal guidance or regulation on all legal aspects of cryptocurrencies be it recognition, taxation, illegal or illicit activities. Observing the law of the land is a choice, paying tax (is a civil duty) is a choice but those decisions are made against an understanding of the consequences.
That said, without the universality of a global legal framework, in the same way that tax treaties and the like work, there will likely remain ambiguities and uncertainty But there will likely also be jurisdictions where you can chose to live that suit your lifestyle or political-economic preferences. (Just beware of retrospection!!!).
Business failures are a normal part of commercial activity but the activities of the few taint the entire sector and related communities. Whilst we are require to be vigilant, conduct appropriate due diligence, ask the questions that matter of those presenting projects for consideration as well as blow whistles when needed, we also need to hold ourselves to a higher standard and ensure that the brave new world we profess to be building is done so on solid ethical foundations.
Consequences and conclusions
I am not suggesting that cryptos are merely the victims of some unfortunate but bad publicity, I wouldn't be that simplistic but it certainly doesn't help the case for the defence.
There does need to be a general recognition that regardless of the space or sector that by providing the means, motive and opportunity will always attract the wrong types of people.
However, on the basis that tax avoidance is smart and conducted by the rich and tax evasion is for the poor and desperate, always look for motivation and you don't need to look far to understand who has the most to lose at the hands of cryptos and the most to gain by perpetuating the myth of their lawlessnes
Remember........’Privacy is the key and the curse! It’s what they fear most!’