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Bitcoin Has No ‘Visible Impact’ on Financial Crime: Hong Kong Government

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

Bitcoin skeptics often deride cryptocurrency for its supposed associations with criminal networks and illicit activities. However, a new report from the Hong Kong government says that rising consumer interest in bitcoin has not correlated with a “visible impact” on the risk of financial crimes.

Officials made this claim in the government’s annual money laundering and Terrorist Financing (ML/TF) risk assessment report , which said that bitcoin and other “virtual commodities” (VCs) currently present a “medium-low” risk to the government’s ability to prevent and prosecute financial crimes.

“Although there is inherent ML/TF vulnerability related to VCs, there does not seem to be any visible impact affecting the overall risk in Hong Kong so far. The risk of VCs is assessed as medium-low,” the multi-agency task force wrote in the report. “The current legal and regulatory provisions relating to ML, TF, fraud and other crimes are wide enough to catch offences involving the use of any general property, including VCs.”

The report is the latest data point in a growing body of research that suggests bitcoin’s associations with criminal activity have been far overblown and that the rate of illicit transactions is decreasing over time as cryptocurrencies become more common in mainstream financial markets.

Recently, the office of the Quebec government’s chief scientist published a fact-check on cryptocurrencies in which they found that bitcoin is used in very few crimes.

Indeed, the US dollar remains the currency that is most widely-used among criminal networks.

However, many people continue to propagate the myth that bitcoin is — in the words  of BlackRock CEO Larry Fink — an “index of money laundering.”

Last week, former CEO Bill Harris penned an incendiary op-ed in which he alleged that, among other things, bitcoin is used almost exclusively by criminals.

As evidence, Harris cited dark web marketplace Silk Road and bitcoin ransomware. The former, of course, was shut down in 2013, while the latter has had far less economic impact  than the media attention surrounding it suggests.

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