Tax Cheats & Criminals
Note: All data in this section updated as of March 30th, 2022
Several of the core benefits of cryptocurrencies could also be seen as weaknesses. Indeed, critics argue that they are the ideal venue for:
Tax Evasion: Because cryptocurrency transactions are anonymous, people will use them to evade taxes
Criminal Activity: Transactions can’t be regulated, which means that people will buy illegal goods online and criminals can easily log in to a decentralized service to launder money
Funding Terrorists: Because the government can’t seize assets like they did with Russia after it invaded Ukraine, terrorist groups will hold all of their funds in Bitcoin
While all of these are definitely possible – and even seem logical at first blush -- the data simply doesn’t support these fears. In fact, only 0.15% of all cryptocurrency transactions are connected to criminal dealings.
Illegal Activities Represent Only 0.15% of Cryptocurrency Transactions
A big part of the reason for this is probably because cryptocurrency transactions aren’t anonymous, they are “pseudonymous” – meaning that if anyone can tie you to your address, they can see all of your transactions. This has proven a boon time and time again to law enforcement, who have used the transaction history to track down several high profile thieves. In 2022 alone, the Department of Justice seized $3.6 billion from crypto hackers.
Ironically, given the fact that all transactions are recorded forever on a digital ledger, cryptocurrencies may ultimately reduce crime, fraud and tax evasion.
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