***Disclaimer – I am not a financial advisor, nothing in this article should be interpreted as financial advice, and I currently own bitcoin along with several other cryptocurrencies***

About one year ago, Forbes obliterated the false narrative of cryptocurrencies being the most popular payment method of choice in illicit transactions (such as sanction evasion, black markets, financing terrorism, etc.). It showed that only 0.34% (about $10B in transaction volume) of all cryptocurrency exchanges involved illegal activity, down from about $21B in the year before. During the hearing on March 17th, Jonathan Levin of Chainalysis announced it’s now down to 0.15% as of 2022. To put that in perspective, an estimate of 5% of GDP (aka all transactions in an economy) is likely illegal activity, making crime 30 times more likely to happen without crypto.

The trend will continue to decrease because correct usage of cryptocurrency improves transparency and security by design (due to the underlying blockchain technology that makes it so secure), and criminals don’t like transparency since it makes it easier for authorities to track them. When enacted in a structured environment with a self-sovereign, decentralized ID with appropriate checks and balances to watch the regulators, it preserves privacy while opening up a wide array of decentralized investment opportunities.

Key Takeaways

Fast forward to this past week in Congress, the highly politicized March 17th hearing on cryptocurrency’s role in the Ukraine-Russia conflict produced a few key takeaways:

• On a panel of four experts, congressional opponents of cryptocurrency could not find a single cybersecurity expert to back the claim that Russian ‘Oligarchs’ have used cryptos to evade sanctions. They all point out that while it’s theoretically possible, there is no realistic pathway for them to do it, mainly because of the lack of liquidity in the market and the Western-controlled SWIFT banking system shutting down Russia’s fiat/crypto ramps.
• The distribution of aid with crypto in Ukraine is a real-time example of how cryptocurrencies are beneficial in providing it because of how quickly and securely funds can be dispersed in a traceable fashion.
• Chainalysis as a company is invested in Bitcoin, has been transparent with its operations, has a significant influence on the visibility of blockchains of different cryptos, and works with authorities on warrants. This means there is a private company tracking all cryptocurrency transactions (though the identity of participants is hidden). This level of coordination raises questions about the warrant approval process to discover those identities.
• Stablecoins (cryptocurrencies paired directly to other assets like the USD or gold) provide a mechanism for the dollar to maintain a presence in various markets and are thus unlikely to get banned by regulators who want American influence through the dollar used as widely as possible.
• We should pay attention to Financial Action Task Force (FATF) recommendations, as they seem likely to function as the mechanism used to implement government overreach in financial surveillance.

Exxon Mobil recently made headlines by announcing it was investing in a bitcoin mining program designed to slash emissions but hasn’t yet released many project details. Janet Yellen, former Federal Reserve Chairman and current Treasury Secretary known as a vocal opponent of crypto, recently began changing her tune – attending another congressional hearing and saying it plays a growing, beneficial role in financial markets. Russian government officials are currently considering accepting bitcoin as payment for oil, and Qatar (who always used the dollar) recently announced it is considering accepting the Chinese Yuan for its oil payments. 

Political Outlook

The current Ukrainian-Russian war is disrupting the global order and causing tectonic shifts in economic systems and capital markets. The hearing suggests that most US politicians are in favor of crypto, but we need to remain watchful for overreaching financial surveillance. Current signs in the market suggest cryptocurrencies are on the rise, and the traditional fiat system is about to suffer from hyperinflation and widespread turmoil.

If you are interested in a full explanation of the March 17th Hearing, see below for a full breakdown by the Coin Bureau.