Crypto is now so mainstream that it’s part of the 2024 election discourse . At a time when political rhetoric around the issue heats up, it’s important to keep in mind that over 50 million Americans of all political stripes have owned crypto, and that is a natural bipartisan issue. Unfortunately, a vocal minority have persisted in pushing a false narrative that crypto’s primary use case is money laundering or illicit finance.
The reality is that crypto is a powerful tool to track and stop criminals, which is why most crooks avoid using it. Recent estimates put blockchain illicit activity at about 0.34% of all transactions. The vast majority of these illicit transactions are occurring offshore on unregulated or under-regulated exchanges.
So why do we so often hear about crime on the blockchain? It’s precisely because, unlike the $100 bills that are so popular with many criminals, crypto is easy to track. The fact that we can easily identify and trace illicit activities is proof that blockchain can actually help law enforcement. In contrast, cash crimes are less frequently reported because they are incredibly difficult to track.
When it comes to facilitating criminal activity, cash remains unrivaled. Its untraceable and anonymous nature makes it the perfect tool for bad actors. In the United States alone, estimates suggest that as much as 33% of cash in circulation is being used by criminals and tax cheats.
According to data from the Treasury Department , less than 0.5% of the estimated $2 trillion laundered globally each year is connected to crypto. And that’s only accounting for the laundered money we know about, largely through the traditional financial system and not accounting for cash.
Contrast that to blockchain technology, which underpins all cryptocurrencies, and offers law enforcement agencies an unprecedented level of transparency. Every transaction is permanently recorded on a public ledger, making it infinitely more traceable than cash. This transparency can be leveraged to track and dismantle criminal networks at a speed unmatched by any other financial technology.
For example, our Global Intelligence team at Coinbase worked closely with the Metropolitan Police in London following a violent home invasion where a smart contract developer was forced to transfer crypto to assailants. Blockchain analysis quickly traced the stolen funds, leading to an ongoing investigation into the perpetrators. This case exemplifies how blockchain can turn the tide in favor of law enforcement.
Real Wins in the Fight Against Crime
Our partnership with law enforcement has led to significant victories. In April 2023, Hamas’ military wing, the Al-Qassam Brigades, ceased Bitcoin fundraising because it was too easily traced by Israeli intelligence using blockchain analytics. Similarly, the Israeli government seized $1.7 million in crypto from wallets linked to Hezbollah, thanks to tools provided by Chainalysis.
Coordinated efforts with Homeland Security also led to the identification and arrest of a major player in a phishing scam that targeted over 1,000 Coinbase users, resulting in the recovery of $28.6 million. Each of these cases underscores a crucial point: crypto is not the enemy; it is a formidable ally in the fight against illicit activities.
The idea that cryptocurrency is synonymous with criminality is a classic myth. Like the early days of the internet and telephones, new technologies often face skepticism and fear. However, just as these technologies became essential tools in modern life, so too can cryptocurrency be a force for good.
Cryptocurrency’s transparency is uniquely suited to be a tool for stopping criminal activity, not enabling it. Unlike traditional financial systems, which are shrouded in secrecy by design, blockchain networks keep everyone honest. For example, recent joint exercises between Coinbase and law enforcement quickly identified over 1,450 potential victims across the ecosystem and traced millions of dollars in suspected illicit funds, demonstrating crypto’s potential in crime prevention.
All of this underscores why it’s time to lay aside the stale narrative that crypto and criminality are intricately linked. This narrative amounts to an unfair pigeon-holing of a technology and industry that has so much to offer individuals, governments, businesses and society as a whole.
The benefits of crypto include an opportunity to tackle inflation with built-in supply or circulation caps. Crypto is also faster than traditional money transfers, and can provide people lacking access to traditional infrastructure with financial autonomy. Businesses can attract new customers and ease cross-border trading. Charities can easily audit donations. And yes, law enforcement can easily trace illicit activity. The list goes on.
Let’s turn the page on this recurring myth of the links between criminality and crypto, and start focusing our energy on the real-world benefits. Let’s reduce our dependence on cash and embrace a future of finance that works for everyone, worldwide.
Philip Martin is chief security officer at Coinbase. The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune .
This story was originally featured on Fortune.com
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