Binance CEO Highlights Disproportional Accounting of Illegal Activities in Cryptocurrency and Fiat
The debate surrounding illicit financial activities within the cryptocurrency space has been a contentious issue, with critics often pointing out the potential for misuse. However, recent comments by Binance CEO Richard Teng and analysis by University of Western Australia lecturer Dr. Andrzej Gwizdalski provide a new perspective.
Dr. Gwizdalski compiled data from the United Nations, the World Economic Forum, and blockchain analytics firm Chainalytic to compare illicit activity in cryptocurrencies and traditional fiat currencies. His findings show a stark contrast. Cryptocurrencies are often highlighted as being used for illegal activities, but the amounts are much lower than traditional fiat systems.
The United Nations Office of Drugs and Crime notes that estimates of the amount of money laundered globally in a year range from 2 to 5 percent of global GDP, or $800 billion to $2 trillion. This is mainly done through traditional fiat currencies. Meanwhile, the World Economic Forum reports that corruption costs developing countries around $1.26 trillion every year, highlighting the scale of illicit activity in traditional financial systems.
In contrast, illicit use of cryptocurrencies hit a record $20.1 billion in 2022, according to Chainalytics data. Although these numbers are significant, they pale in comparison to estimates for fiat currencies. Importantly, the nature of blockchain technology ensures that cryptocurrency transactions are transparent and traceable, making cryptocurrencies a less attractive medium for illicit activity.
Binance CEO Richard Teng echoed this sentiment. He emphasized that the narrative about the role of cryptocurrencies in illicit activities needs to change, especially considering such comparisons. Quoting Dr. Gwizdalski, Teng highlighted that traditional fiat currencies such as USD are involved in approximately $3.2 trillion worth of illegal activities each year, which is more than 100 times the amount involved in cryptocurrencies. He suggested a reconsideration of the narrative, arguing that fiat currencies’ involvement in corruption and money laundering should not extend the reputation of cryptocurrencies.
The information compiled by Dr. Gwizdalski and reflected by Binance’s CEO calls for a rethinking of views on cryptocurrencies in the context of illicit financial activities. This suggests that although cryptocurrencies are not free from being used for illegal purposes, their scale and nature of misuse are significantly smaller than those of traditional fiat currencies. These insights are critical for policymakers and the general public to understand and regulate the cryptocurrency space.
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