Bitcoin is often blamed as a good tool for crime or money laundering. Even Christine Lagarde, president of the International Monetary Fund (IMF) recently called for more regulation of cryptocurrencies to counter illegal activities. Certainly, there are many things that Bitcoin can be blamed for – anonymity, risky investing – but the facts do not support the theory of crime, the Rumor Detector found .
What is bitcoin
Its name comes from “bit”, the smallest unit in a numbering system, and “coin,” coin.
Launched in 2009, it is a virtual currency without national attachment: its value is not guaranteed by the banks of a country. On the other hand, it has a value for the investors who are thus more and more numerous to be interested in it. Originally, it was only exchanged on the Internet and was used to pay for purchases, but some now use it to build a stock fund – a bit like gold.
With the opening of wickets where we can actually change dollars against bitcoins, the Autorité des marchés financiers has however encouraged Quebec investors to be cautious about the risk of fraud and possible loss of money.
Anonymous, but not totally
Although bitcoin users can hold accounts anonymously, it should be called “pseudonymity”, a term used by cryptocurrency specialist Erwan Jonchères. “The anonymity of bitcoin is a myth, there is no more transparent as money, because you have to go through a platform where you have to give personal information. At the limit, if the name is not his, we always know the address of the transmitter and that of the receiver.
Unlike bitcoin, other cryptocurrencies like Zcash, Dash or Monero aim at the anonymity of their users. They are born of a libertarian spirit that aims to blur traceability.
In addition, the bitcoin economy is based on the blockchain , a register that compiles all transactions made since the birth of this currency.
“Every transaction is transparent and public. They are indeed recorded in a kind of ledger whose copies are distributed among thousands of computers, “confirms Jonathan Hamel, associate researcher at the Montreal Economic Institute. An illegal transaction would be easy to link to its user. Specialized firms already offer such a service to the financial authorities who would like to trace the perpetrators of suspicious transactions.
That being said, “like other financial means, bitcoins are not immune to bad trading and can be diverted from their primary investment function,” said Jonathan Hamel.
An Ontario study published in January also noted that cryptocurrencies pose many challenges to the governance of financial markets because of the rapid technological changes they bring about – providing opportunities and loopholes for the underworld.
The media also report numerous stories of theft of bitcoins, hacking – and even more recently, the theft of hardware from the “controllers” (so-called minors) of this cryptocurrency. The hacking of the Mt.Gox bitcoin exchange platform reminded him: “This is the real problem, even if it is minimal compared to all the sums exchanged. Computer cracks and embezzlement remind us of the need to take responsibility as a community, “says Erwan Jonchères.
Bitcoin and illegality
A recent study by the Center for Sanctions and Illicit Finance of the Defense of Democracies Foundation analyzed bitcoin transactions between 2013 and 2016 to discover that “dirty bitcoins” would only account for 0.61% of trade transactions and conversion services over the four years targeted – the largest proportion was 1.07% in 2013.
The researchers also pointed out that 9 of the 102 suspicious transaction accounts they listed accounted for 95% of all illicit transactions – all from the Dark Web .
Online gambling and blending also account for 97% of illicit transactions, which are highly centralized: two European platforms account for half of illicit transfers.
The claims of recent years that some of the bitcoins would be used to circumvent money-laundering rules must therefore be questioned. At the Sûreté du Québec, we want to be reassuring. “It’s not an emergent phenomenon here and we do not have any records related to that,” says Sgt Geneviève Bruno.
And tax evasion?
The Canada Revenue Agency (CRA) records transactions with cryptocurrencies, and therefore bitcoins, and applies tax rules to them . “It’s just like money and you have to declare what you’re doing with it,” says CRA Communications Officer Karl Lavoie.
“I think that tax evasion and money laundering are anecdotal on cryptocurrency networks,” continues Jonchères. Most users do not have the skills for themselves manage their portfolios and exchange platforms or online portfolios are already subject to anti-money laundering rules say AML / KYC “( Anti-Money Laundering and Know Your C u sto mer ).
“Since bitcoin is transparent, it will be very easy to identify all the people trading on an online exchange or portfolio platform,” adds Jonchères.
Accountability or regulation
Ultimately, the user must also take responsibility, says Mr. Hamel. He must understand that no insurance will allow him to recover the sums lost. “In case of loss or theft, there is no 1-800 number to recover its bitcoins.”
Some countries , like Algeria or Bolivia, are trying to ban bitcoins from their territory. Australia and Canada have chosen the path of regulation. Since June 19, 2014, the Parliament of Canada has been regulating cryptocurrencies with the amendment to the Proceeds of Crime ( Money Laundering) Act .
To operate a virtual currency counter or a virtual currency exchange platform in Quebec, companies must even obtain a business license from the Autorité des marchés financiers – under the provisions of the Money-Services Businesses Act .
Verdict
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.
– Isabelle Burgun
Source: http://www.scientifique-en-chef.gouv.qc.ca/en/impacts-of-research-cat/ddr_bitcoin-dessus-lois-faux/ (translated from french by google)
