This is an opinion editorial by Lee Bratcher, the president of the Texas Blockchain Council, and Mark Shut, the director of administrative affairs at the Texas Blockchain Council.
Senator Elizabeth Warren has expressed concerns regarding the use of cryptocurrencies in illicit activities, specifically in relation to the fentanyl and opioid crisis in the United States. In a recent hearing at the Senate Banking Committee, she cited a report from blockchain analytics firm Elliptic, indicating that digital currencies, particularly bitcoin, are being used to fund the fentanyl trade in China. But this is a clear obfuscation of the facts and a willful disregard for concepts in logic.
Let's put this into perspective: Any technology can be used for good or ill but we do have a responsibility to address and mitigate any potential misuse. The proportion of illicit transactions in digital assets is actually quite small compared to the overall transaction volumes.
According to Chainalysis, illicit transactions made up only 0.15% of all cryptocurrency transactions in 2021, down from 0.62% in 2020. In comparison, according to the UN, it 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 illicit activity being fueled by cryptocurrencies, it's crucial to remember that illicit activities are not unique to cryptocurrencies. Consider this quote written in a report by former CIA Acting Director Michael Morell:
“The broad generalizations about the use of Bitcoin in illicit finance are significantly overstated. The blockchain ledger on which Bitcoin transactions are recorded is an underutilized forensic tool that can be used more widely by law enforcement and the intelligence community to identify and disrupt illicit activities. Put simply, blockchain analysis is a highly effective crime fighting and intelligence gathering tool.”
We respect Senator Warren’s office 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 for illicit trade is absolutely false. It is a misrepresentation that is being used as propaganda to push for tighter regulation and potentially infringe on the freedoms that these decentralized systems provide.
Why Attack Bitcoin?
Such misconceptions about bitcoin and digital assets suggest a lack of understanding within the government about these innovative technologies. It is concerning when these misinterpretations are used to justify attempts to limit the freedoms that these systems afford. To put it more succinctly, this is a willful mischaracterization of an emerging technology that has the potential to empower individuals and decentralize power away from governments.
All governments throughout history have abused their authority of coinage and seigniorage, so a free-market tool that threatens that system would clearly be a target. Figures like Senator Warren have been issuing dire warnings about the use of cryptocurrencies in illicit transactions, while calling for greater regulation of the sector. These statements are clearly attempts to exploit the situation to push an anti-decentralization and anti-innovation agenda, resulting in greater government control and limits to the freedoms of individuals.
Instead, our mission should be to foster understanding and acceptance of this innovative technology, emphasizing the transformative potential and the inherent freedoms that Bitcoin can provide. We should defend the right to freedom and privacy that these decentralized systems protect. As such, we can't stress enough the importance of educating our legislators about bitcoin and digital assets. Accurate 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 by Lee Bratcher and Mark Shut. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.