This is an op-ed written by Lee Bratcher, President of the Texas Blockchain Council, and Mark Schott, Director of Administration for the Texas Blockchain Council.
Senator Elizabeth Warren has expressed concerns about the use of Cryptocurrency in illegal activities, specifically in connection with the fentanyl and opioid crisis in the United States. It was cited in a recent hearing in the Senate Banking Committee a report From blockchain analytics firm Elliptic, which indicates that digital currencies, particularly bitcoin, are being used to fund the fentanyl trade in China. But this is a clear confusion of facts and a deliberate disregard for concepts in logic.
Let’s keep this in mind: any technology can be used for good or bad but we have a responsibility to address and mitigate any potential misuse. The percentage of illegal transactions in digital assets is actually very small compared to the total transaction volume.
According to ChainalysisIllicit transactions accounted for just 0.15% of all cryptocurrency transactions in 2021, down from 0.62% in 2020. By comparison, According to the United NationsIt is estimated that annual money laundering amounts to 2% to 5% of global GDP. Furthermore, the Chainalysis report argues that the transparency of blockchain technology allows for better analysis and tracking of illicit activity compared to traditional financial systems.
So while we should certainly aim to reduce the amount of illegal activity fueled by cryptocurrencies, it is important to remember that illegal activities are not unique to cryptocurrencies. Consider this quote written In a report prepared by Michael Morell, Acting Director of the Central Intelligence Agency:
“General generalizations about the use of Bitcoin for illicit financing are grossly exaggerated. The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that could be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Simply put, Blockchain analysis is a very effective tool for crime fighting and intelligence gathering.”
We respect Senator Warren’s position and her commitment to public safety, but we must also speak truth to power, especially when powerful elected officials manipulate statistics for a political agenda. The suggestion that bitcoin and cryptocurrencies are primarily tools of illicit trade is completely wrong. It is a misrepresentation that is being used as propaganda to push for tighter regulation and potentially infringe on the freedoms these decentralized systems provide.
Why attack bitcoin?
Such misconceptions about bitcoin and digital assets point to a lack of understanding within government of these innovative technologies. It is disturbing that these misinterpretations are used to justify attempts to limit the freedoms these systems provide. To put it more succinctly, this is a deliberate mischaracterization of an emerging technology that has the potential to empower individuals and take power away from governments.
All governments throughout history have abused their power over coins and title deeds, so a free market tool that threatens this system would be an obvious target. Figures like Senator Warren have issued stern warnings about the use of cryptocurrencies for illicit transactions, while calling for greater regulation of the sector. It is clear that these statements are attempts to exploit the situation to push the agenda against decentralization and innovation, which leads to more government control and limiting the freedoms of individuals.
Instead, our mission should be to promote understanding and acceptance of this innovative technology, with a focus on the transformative potential and inherent freedoms that Bitcoin can provide. We must stand up for the right to freedom and privacy that these decentralized systems protect. As such, we cannot stress enough the importance of educating our legislators about Bitcoin and digital assets. Careful understanding is key to developing fair and effective regulation that protects consumers without stifling innovation. It is our responsibility as members of the Bitcoin community to ensure that our voices are heard, our technology is understood, and our rights are protected.
This is a guest post from Lee Bratcher and Mark Shut. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc or Bitcoin Magazine.