In light of the recent sanctions imposed by the EU, US and the UK against Russia, cryptocurrency – and its potential dangers – has been brought to the forefront of conversation once again. We’re here to shine a light on some key issues around the use of crypto, in the hope that we can help clear up some general misunderstanding.
Fiction – Cryptocurrency can be used to evade sanctions.
Fact – While no sanctions program is completely airtight, multiple government departments in the US and EU have agreed that crypto can’t be meaningfully used to evade sanctions, at least not in a systemically important way.
Fiction - Criminals use cryptocurrency as it’s untraceable and they can hide their tracks.
Fact – Cryptocurrency is enabled through distributed ledger technology, most notably blockchain. Blockchain transactions are recorded on an unchangeable public ledger, meaning the history of all transactional activity is permanent and transparent.
The European Commission has put forward a legislative proposal (Transfer of Funds Regulation) to improve the transparency and traceability of crypto asset transactions. The proposal calls for crypto exchange providers to collect personal information for transactions with un-hosted (i.e. non-custodial) wallets, for all transactions over 1,000 EUR, and give the data to national authorities. Many crypto users have expressed serious concern about this, as they fear that it will lead to a decline in privacy and slow down innovation.
It’s unfortunate that proposals like this are often based on bad information and incorrect assumptions about crypto, such as the ones we’ve tried to debunk above.
As with everything, cryptocurrencies can be used for admirable purposes too.
Fact - Ukraine has been using cryptocurrency to raise funds to defend their country and for immediate humanitarian relief.
Fact - Donations of over $100 million have reached those in need at unprecedented speed – certainly much faster than would have been possible using traditional payment systems.
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