Why the Bitcoin money laundering myth persists

Since its inception, Bitcoin has been associated with money laundering. However, very few illegal exchanges actually take place in cryptocurrencies.

Some myths about cryptocurrencies die hard. “There has always been a lot of fantasies and information about money laundering with bitcoin,” said William O’Rorke, a crypto attorney at ORWL, during a panel discussion on Surfin’ Bitcoin.

The myth did not come out of nowhere: when bitcoin was first created, the cryptocurrency was mainly used to pay on certain darknet-related sites, such as the Silk Road platform, which did not last long. Until now, some criminals use this cryptocurrency (and others) for their business.

For Faustina Fleuret, patroness of the Association for the Development of Digital Assets (ADAN), to think that bitcoin and cryptocurrencies will be associated with criminals is a “biased” opinion.

0.15% illegal trade

According to a study by Chainalysis, in 2021 illegal exchanges involved 0.15% of all transactions in the ecosystem. A figure that is falling year after year as players in the crypto ecosystem comply with anti-money laundering regulations. Similarly, according to a Cambridge study, 3% of cryptocurrency exchange platforms fail KYC (know your consumer).

However, according to Faustin Fleur, there is a “misunderstanding of the cryptocurrency market.” Some people tend to forget that most cryptocurrencies are not anonymous and can be tracked on the blockchain. Thus, some networks could be dismantled thanks to the blockchain much more easily than if cash in dollars or euros were used.

In France, the Pacte law, in particular, introduced the status of PSAN (for a digital asset service provider) issued by the AMF, whereby the player can receive either “registration” or “approval”. To date, 43 players have received registration, including Binance and Coinhouse. Specifically, PSAN crypto players must meet the same anti-money laundering requirements as traditional financial players.

“With the registration of PSAN, a lot has changed,” said Stephanie Cabossioras, legal director of the giant Binance in France. So far, Binance has identified all people who register on the platform (KYC system) and also used the transaction monitoring system to identify suspicious transactions, which were then reported to Tracfin.

But since this is a PSAN player, Binance, like all other players, meets the new requirements, for example, the platform can process requests from law enforcement, “when the police identify suspicions, they can turn them over to us,” admits its legal director. .

If the myth of money laundering loses credibility, it should be remembered that we “cannot prevent individual behavior: a bank cannot guarantee all flows, the same is true for PSAN,” emphasizes Elodie Trevillo from Delubac Bank, who recently received a PSAN. status.

On the way to reinforcement with MiCa

The fight against money laundering should be strengthened, in particular by the MiCa regulation (see our article on this topic), which proposes a new PSAN status for players, reminiscent of the PSAN AMF approval.

“For PSAN, MiCa will be a regulatory step to follow. In France, PSAN approval is like European regulations. The interest of the crypto sector is to comply with European regulations before everyone else. Taking this opportunity, we are taking a step forward and when MiCa comes into force, players they will be able to convert their PSAN approval and use a European passport,” said Stephanie Cabossioras.

Will Binance apply for PSAN accreditation? A question may arise.

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