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Bitcoin Isn’t a ‘Magnet’ for Criminal Activity: Quebec Government

Last Updated March 4, 2021 5:06 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:06 PM

Bitcoin is not a tool for money laundering, nor is it a “magnet” for other types of criminal activities, the office of the Quebec government’s chief scientist said in a newly-published article.

Earlier this week, the office of Quebec Chief Scientist Rémi Quirion published a fact check on Bitcoin, examining the commonly-held assumption that it is an “index of money laundering ,” in the words of BlackRock CEO Larry Fink.

However, contrary to that belief, the government found that there is no meaningful connection between Bitcoin and criminal activities, primarily due to the fact that Bitcoin transactions are not anonymous and can often be quite easily tracked by law enforcement agencies.

“Bitcoin is not above the law, nor is it a magnet for illicit transactions: it forms only a tiny part of the criminal money circulating around the planet. The reason: it is less attractive for anyone who wants to make transactions without leaving a trace,” said the chief scientist’s office in the article, which was originally written in French.

Citing a recent study from the Center for Sanctions and Illicit Finance of the Defense of Democracies Foundation, the Quebec government noted that funds linked to illicit activities accounted for just 0.61 percent of money entering cryptocurrency trading and conversion platforms over a four-year period.

Moreover, the percentage of Bitcoin transactions related to money laundering actually declined over time, from 1.07 percent in 2013 to just 0.12 percent in 2016. This may be partially due to the fact that privacy-centric cryptocurrencies like Monero have largely replaced Bitcoin as the currency of choice on dark web marketplaces.

These figures are no surprise to cryptocurrency advocates, who have long decried Bitcoin’s undeserved reputation as a tool used primarily for illicit purposes. Indeed, as CCN.com has reported, the US dollar is still the most widely-used currency among criminal networks.

However, it’s notable that a government agency is willing to acknowledge that this is the case, and it represents an important step toward bringing this nascent asset class further into the mainstream.

The report also noted that claims that Bitcoin is unregulated are off base, as it is subject to numerous local and national regulations. In Quebec, for instance, companies must obtain a business license before operating a cryptocurrency exchange in the province.

Quebec flag image from Shutterstock.