Is crypto really ideal for money laundering?

Money laundering is alleged to be the most feasible illicit use of cryptocurrencies. It would appear as though cryptocurrencies are ideal for converting ill-gotten earnings into something like Monero with no loose ends. But let’s see just how true this supposition is.

How is money laundered?

The three-stage process of laundering criminal proceeds is considered a basic model when describing laundering schemes. It was identified by the U.S. Customs and Border Protection agency. It is interesting to note that the Americans studied money laundering schemes in drug trafficking. In fact, they found that the illegal drug trade is carried out exclusively in cash, mainly in small bills. This casts some doubts on the notion that cryptocurrencies are used in drug trafficking.

The question arises: Isn’t it easier to sell illegal drugs using cryptocurrencies than cash as even newspaper articles claim? No, it’s not. The police, criminals, and terrorists all know that the only form of money that is truly anonymous, convenient for calculations, leaves no traces, and is totally legal is cash in state-produced banknotes. And the most secure transaction is the transfer of cash from hand to hand.

Crypto projects find this fact hard to grasp as they spend years developing more and more anonymous cryptocurrencies in hopes that drug traffickers and fundamentalists will fund them with billions.

Transferring cash into non-cash form is the riskiest stage in laundering. Cryptocurrencies offer no viable workaround here since you can’t just take them and put them in a laptop, turning them into Bitcoin.

As research shows, criminals sometimes invest in securities or other assets. But in the majority of cases, money, in cash, is placed into bank accounts. Hence the first stage in laundering is called placement.

The next stage of money laundering is called layering. At this stage, criminals carry out numerous financial operations with the aim of taking the financial footprint as far away from the real investors as possible. One may think that this is where cryptocurrencies can be indispensable.

There are two fundamental problems.

The first is that law enforcement agencies have known about this for a long time. Crypto transactions involving huge sums of money immediately arouse interest and prompt them to find the “entry point” of this money and find out why a person is trying to withdraw a supposedly honestly earned billion in such a strange way.

The second problem is that withdrawing money into crypto does not make it legal. This is thus an unnecessary and unsafe laundering step to take. Cryptocurrencies themselves need a kind of “laundering”, in the sense that they need to be transformed into traditional financial instruments.

The next step, integration, is the consolidation of assets from various origins and introducing them back into the legal economy. In most cases, the money is credited to an account at a bank, and not just any bank, but a highly reputable bank, preferably in a very developed country. If this step is successfully completed, then the laundering process is complete and the money enters legal circulation.

Banks are therefore the key link in laundering, i.e. the legalization of proceeds from crime, at all stages of laundering.

At no stage in any of the described ways do cryptocurrencies have any advantage over banking instruments or simple cash exchanges.

No central bank in the world provides any statistics on money laundering through cryptocurrencies, but they all keep talking about what a great money laundering tool it is, while the banks themselves are the main, and often the only necessary element in almost all money laundering schemes.

The main conclusion is simple: cryptocurrencies are neither the main nor any significant medium of exchange in the criminal world. Cryptocurrencies are not used on a notable scale in drug or human trafficking.

There are often talks about the use of cryptocurrencies in the arms trade, but even in this business, there is a low probability of crypto being used on a large scale. This is an extremely conservative business, where connections and methods have been perfected over decades and no cryptocurrencies with their volatile prices are needed.

The accusation that cryptocurrencies are used in financing terrorism is likewise doubtful.

In any case, the use of cryptocurrencies in any criminal activity cannot be compared with the extent to which ordinary money is used.

The main reason for the unsuitability of cryptocurrencies for crime is that all their cypherpunk properties are applicable only within the crypto-currency ecosystem and subculture. As soon as some criminal money goes beyond the ecosystem, it instantly loses all such properties, starting with anonymity.


The difference between trading and broker platform

With the first steps in the crypto environment, one may wonder about the best way to be involved into the process with the biggest possible benefits. So, there are two main ways to go – either to enter the trading platform or get acquainted with offerings of broker, which can be also defined as being involved directly or have and intermediary for transactions. There is a different way to decide which of the options is the best, depending on the conditions and planning of asset using, but the overall arguments about domination of trading or broker in terms of convenience are still quite common.

How broker and trading are defined

First of all, the main difference in the methods is defined by the participants of transactions. So, broker usually works for the certain company offering the service of exchange, whereas trading platform makes itself the mediator between users who want to exchange the assets. The same notions can be also understood in the other way – trading platform involves the owner of crypto assets directly into transferring, where they can make their own choice about course of actions, and broker is entrusted with certain amount of assets which should be benefitted from, so they make all the decisions.

Benefits of trading platforms

  • Complete transparence of operations – it is clearly seen where the funds are gone and given due to direct involvement into transactions performed.
  • Comparative cheapness of service – is not necessary to pay additional percentages for broker’s work, allowing to concentrate more funds on operations.
  • Bigger choice of crypto pairs – different platforms try to overpower the others in the number of combinations available for exchange.
  • Suitability for long-term interaction – when planning the holding strategy, it is rather convenient to use trading platforms directly.

Advantages of broker platforms

  • Activity license available – in order to set the credibility of service, many get the special license, verifying the right for being entrusted with other’s assets.
  • Reliability of results – when it is easy to make mistakes by oneself with lack of experience, the broker handles all the risks concerning transactions.
  • Access to advanced analytical data – for making the most beneficial decisions, brokers track different kinds of useful information that helps in predicting the outcome of forecast.
  • Suitability of short-term interaction – if there is a need in getting the most for the short period of time, it is rather worth requesting the professional’s help in receiving the income.

As a result, each one decides for oneself which option is better when working with crypto – is it convenient to get the experience gradually or entrust the assets to another person who will find the best use for them and get the maximal benefit. It is better to choose wisely, using both methods for each situation and defining the priorities for interaction with crypto depending on the conditions, therefore finding the middle ground.


The expansion of NFT influence to Smart TVs

With the further spreading of crypto activity, no wonder that nowadays it can be regulated on more and more devices. First with standard PCs, then mobile devices, and nowadays even TVs can provide the services for crypto operations. Recently, Samsung announced that for its televisions with connected Smart TV service, the Nifty Gateway platform will be launched. That will allow the users to obtain, sell or exchange NFT.

What is NFT in general meaning

For those who do not know much about crypto notions, NFT or non-fungible token means the non-material asset which serves as certain proof of ownership. The collection of NFTs mainly includes the rights of owning the certain piece of art – music, videos or images united by the similar topic. When the one owns such token, it is a great possibility for them to invest or monetize the obtained asset. Such form of ownership proof is especially convenient in cases of establishing the right over modern digital piece of art that does not exist in material form or having multiple owners in obtaining the worldwide-known masterpiece.

The agreement of Nifty Gateway and Samsung companies

In order to make the crypto integration into routine more convenient, the Samsung company established the collaboration with Nifty Gateway platform, one of the biggest NFT markets, that provides the software for integration of non-fungible token purchases into Smart TVs as the separate application. The app will be available mainly for the latest televisions released, as the process of working with tokens and crypto environment in general requires the fair share of resources for smooth operations and interaction with blockchain.

From the statements made during announcement of collaboration, it is known that the users can gain access to the library with more than six thousand examples of artworks, including the ones from the most popular modern artists, like Daniel Arsham, Beeple, Pak and many more. The Nifty Platform is ready to take care of helping the regular users to learn more about the perspectives of crypto assets, showing the benefits of obtaining one or regulating the activity of crypto obtained. The main principle of the platform – to make the interaction with crypto more comfortable and convenient than ever, making more people join the community of NFT owners. For that reason, uniting the forces with one of the leading companies on the technological market seemed like an essential step to take, and adding the software to televisions – as the strategical move of expanding the audience involved into crypto activity. Both of the companies expressed their expectations about the collaboration in a positive way, being sure that in the nearest future the first results will be clearly visible, illustrating major results. And, most possibly, this will be a truly effective way to illustrate all the advantages given by tokens and make more people get acquainted with the benefits given by cryptoindustry to the ones entering it.


Furthermore plans of Estonia concerning crypto activity

One of the countries which is not really fond of perspectives given by crypto environment is Estonia. The rules presented by government are rather strict, presenting the decisions on the brink of banishing crypto, so many were supposed to expect for soon close of virtual trading platforms. But the announcements made in the end of 2021 and beginning of 2022 state that the further policy applied by Estonia will not include complete restriction of crypto activity, presenting instead other of solutions.

The reason behind opposition to crypto

Although Estonian governmental structures were among the first that accepted the blockchain technology and started using its potential, the general conditions of crypto operations were not something they were glad to apply. The principles of anonymity and inability to track the transactions performed by the users became the problem to the officials, as the possibility of money laundering or financing of terrorism could not be excluded in such case. For that reason, the law projects are created to try to define the course of the country in the issue of crypto assets which can balance the advantages and disadvantages given.

What can we expect from crypto policy of Estonia now

The latest statements of law policy explain that the government prefers to apply additional measures of safety when presenting the licenses to allow crypto operations on the territory of Estonia. With the new establishment taking care of criptocurrency operations instead of FIU the right goes to ESFA, the status of crypto assets will also be defined in a more concrete manner, making it more rightful as the mean of investment. There may also be the possibility of declaring the existence before licenses as inactive and making the applicants go through the procedures for acceptance once again. The new demands include the increase of the equity in more than twenty times, the expanded list of documentation attached, more strict checks for law-biding among the personnel and more. Moreover, the necessity of registration in the separate lists according to the instruments presenting has appeared, each category should be mentioned in corresponding registry and the same company can be mentioned in several categories for each given service.

But not only the companies presenting the services are influenced, but the people receiving them, will experience the changes, too, although in an indirect manner. The governmental structures leave the right to request for the identity of private holders of crypto assets, therefore removing the notion of anonymity in crypto environment, making it similar to the banking system with the blockchain characteristics. That is why crypto status is kind of controversial in the country – despite blockchain being accepted as part of the structure, the main principles of operations within crypto environment are removed, making it look as intermediary between acceptance of advantages and neglect of problematic issues.