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Financial firms and governments deeply sceptical of cryptocurrencies - survey

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09/29/2020 | 11:04am EDT
FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on motherboard in this illustration picture

Financial firms and governments overwhelmingly see cryptocurrencies as risky, a major survey found on Tuesday, with the potential for bitcoin and other digital tokens for use in money laundering and sanctions busting among the chief worries.

Around 60% of respondents from financial firms, government and the private sector alike to the survey by the Royal United Services Institute think-tank and the Association of Anti-Money Laundering Specialists said cryptocurrencies were a risk rather than an opportunity. Illicit usage was the major concern.

The findings, one of the most detailed efforts yet to map out mainstream global views towards cryptocurrencies, lay bare the depth of scepticism towards the emerging tech.

They suggest an uphill struggle for the crypto industry to achieve wider acceptance, even as countries across the world grapple with how to regulate cryptocurrencies. The European Union will introduce new rules for some cryptocurrencies by 2024, documents showed last week.

The perception of criminal use of cryptocurrencies is deep-rooted, the survey found. Nearly 90% of respondents from financial firms said they were worried about crypto being used to launder money. Over 80% were worried about sanctioned actors using digital coins to circumvent the formal financial system.

"All respondents accept that cryptocurrencies are vulnerable to criminals," the survey's authors said.

The extent to which crypto is used for crime is unclear, with past research by major blockchain analysis firm Chainalysis this year putting the rate as low as 1% of all transactions.

Still, digital currencies are popular with cyber-criminals, as the July hack of major Twitter users to reap bitcoin shows.

Cryptocurrencies have also been used for the funding of militant groups. The U.S. Justice Department said last month it had targeted efforts by the military wing of Hamas, al Qaeda and Islamic State to raise funds via cryptocurrencies.

Only a fifth of respondents from financial and other private firms said they viewed digital coins as an opportunity, the research found. Among the potential benefits cited was the possibility crypto could extend access to financial services.

The survey was based on over 550 responses from financial institutions, law enforcement and financial watchdogs, and legal and insurance firms. It also tapped the cryptocurrency industry.

By Tom Wilson

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