A number of officials, including US Treasury Secretary Janet Glenn and ECB President Christine Lagarde, are now expressing concern about cryptocurrencies and, in particular, their connection to money laundering.
Undoubtedly, cryptocurrencies have risen in value in the last year, with bitcoin even exceeding $61.000 – a new record high.
However, the CEO of a leading bitcoin exchange warns that governments around the world may start restricting the use of bitcoin and other cryptocurrencies from now on. “I think there could be some repression,” Jesse Powell, CEO of Kraken, the world’s fourth-largest digital currency exchanger in terms of trading volume, told CNBC.
Powell strongly argues that regulatory uncertainty surrounding crypto is not going to go away any time soon. A recent law proposed by the US government to combat money laundering provides for people who are involved in encryption and have a private digital wallet to undergo authentication whenever they trade for $3.000 or more.
“This practice could seriously damage encryption by flattening its original philosophy: Affordable financial services for all,” Powell said.
Cryptocurrencies such as bitcoin are often associated with illegal activities mainly due to the ability offered by the crypto market to individuals to trade under pseudonyms and their true identity remains hidden. You can see where money is being sent but not who sent it or who exactly received it.
However, there are signs that the use of malicious encryption is expected to decrease. Illegal activity accounted for just 0.34% of the volume of encryption transactions last year.
America, however, is not the only country considering enforcing new strict rules on the issue of encryption. In India, for example, the authorities banned the use of cryptocurrencies and punishes anyone who owns or trades them.