Crypto is now so widespread that it is part of the 2024 Election discussion. At a time when political rhetoric on this issue is becoming increasingly heated, it is important to remember that over 50 million Americans of all political stripes own cryptocurrency, and this is of course a bipartisan issue. Unfortunately, a vocal minority has persisted in the false claim that cryptocurrency is primarily used for money laundering or illicit financing.
The reality is that crypto is a powerful tool to track and stop criminals, which is why most crooks avoid using it. Recent estimates suggest that illegal activities on the blockchain are at around 0.34% of all transactions. The vast majority of these illegal transactions take place offshore on unregulated or inadequately regulated exchanges.
So why do we hear about crimes on the blockchain so often? It’s precisely because cryptocurrencies are easy to track, unlike the $100 bills that are so popular with many criminals. The fact that we can easily identify and track illegal activity is proof that blockchain can actually assist law enforcement. In contrast, cash crimes are less frequently reported because they are incredibly difficult to track.
When it comes to facilitating criminal activity, cash remains unmatched. Its untraceable and anonymous nature makes it the perfect tool for criminals. In the United States alone, estimates suggest that up to 33% of the cash in circulation is used by criminals and tax evaders.
According to the Ministry of Financeless than 0.5% of the estimated $2 trillion laundered around the world each year is linked to cryptocurrencies. And that only takes into account the laundered money we know about, most of which is laundered through the traditional financial system, not cash.
In contrast, blockchain technology, which underlies all cryptocurrencies, offers law enforcement an unprecedented level of transparency. Every transaction is permanently recorded on a public ledger, making it infinitely more traceable than cash. This transparency can be used to track down and dismantle criminal networks at a speed that no other financial technology can match.
For example, our Global Intelligence Team at Coinbase worked closely with the Metropolitan Police in London following a violent break-in that forced a smart contract developer to transfer cryptocurrency to attackers. Blockchain analytics quickly tracked down the stolen funds, leading to ongoing investigations into the perpetrators. This case is an example of how blockchain can turn the tide in favor of law enforcement.
Real successes in the fight against crime
Our partnership with law enforcement has resulted in significant successes. In April 2023, Hamas’ military wing, the Al-Qassam Brigades, Bitcoin discontinued fundraising because it was too easily tracked by Israeli intelligence using blockchain analytics. Similarly, the Israeli government seized $1.7 million worth of cryptocurrencies from Hezbollah-linked wallets thanks to tools provided by Chainalysis.
Coordinated efforts with the Department of Homeland Security also led to the identification and arrest of a key actor in a phishing scam targeting over 1,000 Coinbase users, resulting in the recovery of $28.6 million. Each of these cases underscores a crucial point: crypto is not the enemy; it is a formidable ally in the fight against illicit activity.
The idea that cryptocurrency is synonymous with crime is a classic myth. As in the early days of the internet and the telephone, new technologies are often met with skepticism and fear. But just as these technologies have become indispensable tools of modern life, cryptocurrencies too can be a force for good.
The transparency of cryptocurrencies is great at preventing criminal activity, not enabling it. Unlike traditional financial systems that are inherently shrouded in secrecy, blockchain networks keep everyone honest. For example, recent joint exercises between Coinbase and law enforcement quickly identified over 1,450 potential victims across the ecosystem and tracked down millions of dollars in suspected illicit funds, highlighting the potential of cryptocurrencies in crime prevention.
All of this underscores why it’s time to put aside the tired narrative that crypto and crime are closely linked. This narrative amounts to an unfair pigeonholing of a technology and industry that has so much to offer individuals, governments, businesses, and society as a whole.
The benefits of cryptocurrencies include the ability to combat inflation through built-in caps on supply or circulation. Cryptocurrencies are also faster than traditional money transfers and can provide financial independence to people who don’t have access to traditional infrastructure. Businesses can attract new customers and facilitate cross-border trade. Charities can easily audit donations. And yes, law enforcement can easily track down illegal activities. The list goes on.
Let’s move past this recurring myth of the crime-crypto connection and focus our energy on the real-world benefits. Let’s reduce our dependence on cash and embrace a financial future that works for everyone, globally.
Kristin Smith is an Army veteran and CEO of Blockchain Association. The opinions expressed in Fortune.com commentaries are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.