Technology and its development opportunities have solved our lives in many everyday aspects, but they have also confronted us with ethical dilemmas and some risks that are of global concern, such as the use of personal data, or the increasingly common cybercrimes.
But, without a doubt, one of the controversies worldwide is related to the expansion of cryptocurrencies and their scarce regulation and supervision – currently in full debate – which leaves the door open to various crimes and malicious uses that urgently need to be prevented.
It is not a question of crucifying digital assets and their use, but of putting on the table the concerns evidenced from their origin, and that are linked to the lack of control by governments or regulatory entities.
The above, considering that – according to Coinmarketcap, the most important reference portal for cryptocurrencies – the total value of the funds invested in cryptocurrencies in the world as of December 2021 is estimated at about 2.1 trillion dollars, an amount that exceeds that of the 12 largest banks in the world combined.
According to a report by the Financial Action Task Force (FATF), Virtual Assets have the potential to stimulate innovation and financial efficiency, but they also create new opportunities for scams, illicit activities, terrorist financing, money or asset laundering, tax evasion, financial fraud, among others. This, because cryptocurrencies allow cross-border operations to be carried out quickly, as well as acquiring and transferring assets digitally, usually outside the regulated financial system, which allows to disguise the origin or destination of the money, making it difficult to detect suspicious activities in a timely manner.
Usually hackers ask for ransom through cryptocurrencies. A recent example was the one that happened to the iodine producer Atacama Minerals, which suffered the cyberattack of its financial files by hackers, who subsequently requested a payment in Bitcoins to decrypt the kidnapped information.
The extraterritoriality of transactions, that is, they can be carried out from anywhere in the world, hinders the detection of illicit acts and the application of criminal responsibilities, making cooperation between Governments essential.
Likewise, the lack of transparency is another critical point to consider, especially in anonymous transactions, which even allow a person to have several accounts and make transfers between them, making it difficult to trace operations. In this sense, recently, the European Union took a step forward and voted on a regulation that prohibits anonymity in cryptocurrency transfers, requiring the competent authorities to include information about their origin and beneficiary.
In fact, in the context of the war, the use of cryptocurrencies in Russia has grown, as it is a way of not losing purchasing power in the face of sanctions, but also a way to circumvent them. In addition, there was an increase in requests from Russian investors seeking to liquidate cryptocurrencies in the United Arab Emirates, to protect their fortunes, which puts the Western world on alert and the need to know the origin and destination of transfers.
It is for this reason, that a recent report by the International Monetary Fund (IMF), called for stricter international regulation for the cryptocurrency industry – as some bitcoin companies do – which requires intermediaries, such as digital currency exchanges, to have identity verification standards to prevent crimes. This, because the entity points out that cryptocurrencies are more popular in countries perceived as corrupt and with more lax capital controls, unlike countries in which the traditional financial sector is well developed.
Just as the constant is that technology advances faster than regulations, we cannot sit idly by as happened with mobile taxi applications, which still debate their legality in Chile. Nor can we ignore something that is a reality and, therefore, self-regulation is important, promoting proactive behavior, with adequate policies and procedures to prevent crimes associated with digital currencies, especially doing the due diligence to customers and suppliers, establishing strong controls in all processes where they are involved.
We can’t wait for the law to come out, it’s the mThere are many companies that work in the field that should start now with self-regulation, as many are already doing. Let us remember that the private sector has an important role in preventing money laundering, and just as the traditional financial industry is a great collaborator to stop criminals, the traders so should they be. Hopefully it will be the companies that follow the best standards, and that self-regulation can be established from the industry worldwide, isolating those that lend themselves to support criminals. The challenge is great, but the risk greater.
The content expressed in this opinion column is the sole responsibility of its author, and does not necessarily reflect the editorial line or position of El Mostrador.