Bitcoin lost a significant amount of its value this year. In fact, there was a point where Bitcoin almost lost 60% of its value this year. Aside from regulatory changes, hacking incidences made investors panic oftentimes dropping the price of Bitcoin and other top cryptocurrencies.
Just how serious is this problem? Theft of cryptocurrencies from crypto exchanges just in the first six months of 2018 is already three times the number of theft cases last year. And also, it has led to the three-fold increase in associated money laundering activities according to CipherTrace which is a cybersecurity company in the US.
CipherTrace has helped different cryptocurrency exchanges as well as hedge funds in launching a software that can be used for trading cryptos that also comply with the existing anti-money laundering laws.
A Closer Look at the Anti-Money Laundering Market
According to the report, a total of $761 million was stolen from different cryptocurrency exchanges just in the first six months 2018. In comparison to 2017 at $266 million, there is a possibility that crypto exchanges could lose as much as $1.5 billion this year if things don’t change.
According to Dave Jevans who works as the CEO of CipherTrace, “Stolen cryptocurrencies are three times bigger this year than last year so the trend is obviously not our friend here”. He also added that there is a connection between stolen cryptocurrencies and money laundering since digital currencies end up being laundered in order to help criminals hide their identity. And for this reason, there has been three times the number of money laundering of cryptos this year as well.
Japan’s Efforts vs. Money Laundering and Hacking
The Coincheck incident was an eye opener for Japanese regulators. Japan is known for its open-minded approach when it comes to cryptocurrencies. However, it has come up with rules and regulations that will ensure that cryptocurrency exchanges will not have vulnerabilities and compromise funds of its users.
In addition to this, Japan Virtual Currency Exchange Association which is an association comprising of 16 government-approved crypto exchanges in the country decided to ban cryptocurrencies that provide users with anonymity.
This effort has been made in order to “step up consumer protections and improve transparency”. Among the delisted coins include Dash, XMR, and ZEC.
The recent hacks have attracted the attention of regulators worldwide. The US Treasury’s Financial Crimes Enforcement Network (FinCEN) has cited that over $1.5 billion was stolen in hacks from exchanges in a span of two years.
According to Jevans, regulators, cryptocurrency exchanges, as well as global law enforcement are in continuous dialogue on what has to be done in order to prevent these incidences. Jevans said that “Now we are seeing the big guys coming together asking for cryptocurrency anti-money laundering regulation- it is inevitable, it will be unified, and it will be global”.
What exactly can we expect in the coming months? Are we going to see regulatory clarity aimed towards protecting users of cryptocurrency exchanges and rules that could prevent money laundering? At this point, this is something that is within the horizon.