The Chief Scientist of Quebec, Rémi Quirion, has published a document rejecting the popular “myth” that illicit transactions are among those for which bitcoin is principally used. Quebec’s Chief Scientist is closely associated with the Fonds de recherche du Québec (FRQ) – a publicly funded institution dedicated to “providing support for the production and dissemination of knowledge.”
Also Read: 20% of Financial Institutions Examining Starting Cryptocurrency Trading Soon
Quebec’s Chief Scientist Dismisses Claims That Bitcoin is Commonly Used for Illicit Purposes
Mr. Quirion asserts that “Bitcoin is often blamed as a good tool for crime or money laundering,” adding that “Even Christine Lagarde, president of the International Monetary Fund (IMF) recently called for more regulation of cryptocurrencies to counter illegal activities.”
Whilst the Chief Scientist acknowledges that bitcoin can be used as a means to achieve greater anonymity whilst conducting transfers, Mr. Quirion states that “the facts do not support the theory” that criminal use of bitcoin is widespread.
“Pseudonymity” Deters Criminals From Widespread Adoption
Quebec’s Chief Scientist argues that bitcoin offers it’s users “pseudonymity,” rather than total anonymity, which detracts from its potential illicit utility.
According to a rough translation, Mr. Quirion quotes cryptocurrency analyst, associate researcher at the Montreal Economic Institute, Jonathan Hamel – who has argued that the public nature of bitcoin’s blockchain detracts from its anonymity. “Every transaction is transparent and public. They are indeed recorded in a kind of ledger whose copies are distributed among thousands of computers.”
Cryptocurrency analyst, Erwan Joncheres, is also quoted in the document as arguing that “The anonymity of bitcoin is a myth.” Mr. Joncheres has argued that bitcoin is “no more transparent [than] money, because you have to go through a platform where you have to give personal information,” adding that at a bare minimum, information pertaining to “the address of the transmitter and that of the receiver” is recorded by a third party that facilitates the transaction.
Illegal Transactions Comprise Less Than 1% of Bitcoin Circulations
The document points to research conducted by the “Center for Sanctions and Illicit Finance of the Defense of Democracies Foundation” that, after analyzing bitcoin transactions executed between 2013 and 2016, found that only 0.61% of trading transactions in the period were deemed to be associated with illegal activities.
The Chief Scientist also points to center’s findings that illegitimate transactions within the bitcoin economy are extremely centralized, further undermining the suggestion that illicit activities pervade the bitcoin economy. Said research indicated that less than 10% of anonymous free markets were responsible for 95% of illicit transactions involving bitcoin between 2013 and 2016.
As such, Mr. Quirion argues that “The claims of recent years that some of the bitcoins would be used to circumvent money-laundering rules must, therefore, be questioned.”
Money Laundering in Crypto “Anecdotal,” Says Researcher
Mr. Quirion similarly rejects associations between tax evasion and bitcoin, quoting Canada Revenue Agency Communications Officer, Karl Lavoie, as stating “It’s just like money and you have to declare what you’re doing with it.”
Mr. Jonchères has also dismissed assertions that bitcoin and money laundering go hand-in-hand, stating “I think that tax evasion and money laundering are anecdotal on cryptocurrency networks. Since bitcoin is transparent, it will be very easy to identify all the people trading on an online exchange or portfolio platform.”
The document concludes that “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” due to it being “less attractive for anyone who wants to make transactions without leaving a trace […] Ultimately, the user must also take responsibility, […] In case of loss or theft, there is no 1-800 number to recover its bitcoins,” Mr. Quirion stated.
Do you agree that mainstream claims that cryptocurrency and criminality go hand-in-hand are unevidenced? Share your thoughts in the comments section below!
Images courtesy of Shutterstock, www.scientifique-en-chef.gouv.qc.ca
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