When it comes to money laundering and illicit behavior, bitcoin is still getting a bad rap, though according to Changpeng Zhao – the CEO of cryptocurrency exchange Binance, arguably the largest and most popular exchange in the world – this isn’t always warranted.
Changpeng Zhao: BTC’s Reputation Is Still Suffering
In a recent interview, Zhao explained that money laundering is indeed dangerous, though while it’s widely associated with bitcoin, the asset itself doesn’t pose a danger to society and doesn’t open further doors to crime than any other financial asset. He states:
As financial services providers, it is our duty to fight illicit activity. Everyone shares this responsibility, but typically, once the rules are established, people will try to get around the rules, and there are people who just want more business and knowing or unknowingly will facilitate these transactions. We live in a complex world, where one country may view an act as criminal and the other may not. A lot of people have a black and white view, but the world is gray. Not all banks are innocent and not all crypto companies are bad.
It’s easy to label banks as solid financial institutions considering they have been around for so many years, though several have committed hazardous actions against customers. Look at Wells Fargo, for example. The company was recently forced to pay a monster penalty after it was revealed that it had spent years opening accounts in people’s names without telling them.
The crypto space is widely associated with criminal activity thanks to heavy events such as the hacks of both Mt. Gox and Coincheck, two of the largest exchanges in Japan. However, what everyone fails to realize is just how transparent the bitcoin blockchain can be, and so in many ways, despite the harsh reputation bitcoin and blockchain have attracted, they can be deemed safer than traditional institutions.
Crypto Isn’t That Big
Zhao went on to state:
If you are using bitcoin, it is a transparent ledger. Once you have a few transactions, you can trace the funds all the way back to where the coins were mined, so in this way, blockchain provides a very transparent ledger for everyone to analyze. If you piece together a few data points and do a cluster analysis, it is not that hard for an algorithm to analyze the origin. Privacy coins are harder to track, but their market cap is not that high, making larger transactions more difficult, so to be honest, it is much easier to make illicit transactions using fiat than using crypto.
He also states that the market cap for crypto is quite small at the time of writing, which also makes it much easier to track than traditional fiat or other standard assets in a lot of ways.