Home Bitcoin News A U.S. Fed Offical Made A ‘Significant’ Bitcoin Warning – Forbes

A U.S. Fed Offical Made A ‘Significant’ Bitcoin Warning – Forbes

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Bitcoin and cryptocurrencies have struggled to break away from their illegal and illicit connotations, with mixed success.

Bitcoin, which was being used on dark web markets to buy everything from drugs to guns long before the price exploded in 2017, has become even more popular amongst criminals due to it’s epic bull run two years ago.

Now, amid fears global regulators are going to take a harder line with bitcoin and cryptocurrencies in the new year, one U.S. Federal Reserve governor has warned bitcoin and cryptocurrencies “support a significant amount of illicit activity.”

U.S. Federal Reserve governor Lael Brainard (left) made the comments on bitcoin and crypto this week … [+] at an event on monetary policy in Germany.

AFP via Getty Images

“One study estimated that more than a quarter of bitcoin users and roughly half of bitcoin transactions, for example, are associated with illegal activity,” the Fed’s Lael Brainard told the Monetary Policy: The Challenges Ahead event in Frankfurt, Germany, it was first reported by bitcoin and crypto news outlet Cointelegraph.

“Only a third of the most popular exchanges require ID verification and proof of address to make a deposit or withdrawal. This is troubling, since a number of studies conclude that cryptocurrencies support a significant amount of illicit activity,” Brainard added.

Brainard appeared to be referencing a January 2018 paper that found cryptocurrencies to be “among the largest unregulated markets in the world.”

“We estimate that around $76 billion of illegal activity per year involves bitcoin (46% of bitcoin transactions), which is close to the scale of the U.S. and European markets for illegal drugs,” the Australian research group found, adding bitcoin and cryptocurrencies “are transforming the black markets by enabling ‘black e-commerce.'”

More recent studies have returned different results, however. London-based blockchain analysis company Elliptic earlier this year found dark web purchases currently account for approximately 0.5% of all bitcoin transactions.

bitcoin, bitcoin price, Fed, U.S., chart

The bitcoin price has soared over recent years, climbing to around $20,000 per bitcoin in 2017 and … [+] thrusting cryptocurrencies into the public consciousness.

Coinbase

Whatever the true numbers, there is growing concern among regulators and central bankers that bitcoin and cryptocurrencies could undermine government control of the economy and financial system.

Brainard’s comments echo remarks made by U.S. Treasury secretary Steven Mnuchin earlier this year when he branded bitcoin, crypto, and Facebook’s planned libra project a “national security” risk.

Just a few days before, U.S. president Donald Trump attacked bitcoin, saying it and other cryptocurrencies “facilitate unlawful behavior, including drug trade and other illegal activity.”

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