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Europol Is Assessing Ways to Curb Cryptocurrencies Abuse

Europol Is Assessing Ways to Curb Cryptocurrencies Abuse

Europol, the law enforcement agency of the European Union, has started meeting about 16 big digital currency changes to assess the steps to tackle the abuse of the new age financial instrument. As the concerns are increasing on the exploitation of the nascent technology by criminals, the investigating wing is keen to evaluate the ways to crack down to curb money launderers in using the virtual currencies. A three-day conference has already started on Tuesday to discuss the cybercrime on cryptocurrencies.

Enhanced Law Enforcement

Among the participants in the conference included digital wallet providers, payment processors, about 16 digital coin exchanges and officials from several member countries from the EU. According to a Financial Times report, the participants have discussed the abuse of cryptocurrencies for illegal activities. They have also focused on the steps to improve the law enforcement capabilities to prevent such activities. The meeting assumed significance since it came on the heels of a warning from the agency’s director, Rob Wainwright, that approximately 3 – 4 percent of £100 billion of illicit proceeds were from the digital currencies in Europe.

He also expressed his concerns that this proportion was growing at a rapid pace thus calling for immediate steps. Currently, no central bank in the world is regulating the digital currencies. Also, the holding of virtual assets through electronic identities in several cases enables holders to be anonymous in the eyes of the law. Therefore, they were associated with payments for prohibited items like drugs and guns apart from terror funding. The surging prices last year also drew the hackers’ attention for its lucrativeness.

Europol indicated that the conference’s focus would be on “tracing and attribution” of crypto assets apart from steps to counteract services. That is because it makes it easier to cover up from where a digital coin comes from. The authorities do not have any powers to freeze any crypto assets, which were stolen or associated with any criminal activities that were called “tainted” funds.

That is not the case in respect of the normal banking system. In any case, most digital currencies transactions happen through the public ledgers only. Therefore, funds could be tracked until the owners realize it in fiat currencies. That makes some of the observers to call for a centralized system device to flag off any virtual currency wallets that are associated with nefarious activities.

Vigilante-Style Self-Regulation

On the other hand, there are observers who think that the market has already imposed “vigilante-style self-regulation.” For instance, Vienna-based crypto exchange Bitpanda CEO and co-founder, Eric Demuth, said that bigger exchanges have already started to monitor the “tainted” funds movement. He pointed out that it was done through third-party specialists as they have become sophisticated in the recent past.

He said, “You have a bird’s-eye view from above so you can see every transaction ever done. Every exchange has it; it’s a no-brainer. People trying to launder money with bitcoin are three years too late.” Some of the exchanges have indicated that they have already strengthened due diligence processes to check illegal activities.

About the author


Andrew Romans

Andrew Romans is a Silicon Valley-based venture capitalist at 7BC.VC and Rubicon Venture Capital as well as an author of two top-10 books on Venture Capital on Amazon and Masters of Blockchain.

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