Cryptocurrencies are largely considered as risky by financial companies and governments, a major survey has found.
Among the key concerns raised by the survey participants are the potential of bitcoin and other digital tokens to be used in money laundering and sanction busting (the act of trading with a nation with which trade is not officially permitted).
The survey, conducted by the Royal United Services Institute think-tank and the Association of Anti-Money Laundering Specialists, found that about 60 percent of respondents from financial institutions, government and private sectors said cryptocurrencies were a risk rather than an opportunity. The major concern was illegal use.
The findings, one of the most extensive attempts yet to document mainstream global perceptions of cryptocurrencies, revealed the extent of distrust towards the emerging technology.
They suggest that there is a long battle ahead for the crypto industry to gain broader acceptance, even as nations around the world are struggling with how to regulate cryptocurrencies. New regulations for certain cryptocurrencies will be adopted by the European Union (EU) by 2024, after it was approached by the EU countries demanding the same.
The survey found that the perception of illegal use of cryptocurrencies is deep-rooted. Nearly 90% of financial company respondents said they were concerned about the use of crypto for money laundering. About 80 percent were concerned about the use of digital coins to bypass the formal financial system.
“All respondents accept that cryptocurrencies are vulnerable to criminals,” the survey’s authors said.
The extent to which crypto is used for crime is unknown, with past studies by major blockchain analytics company Chainalysis placing the figure as low as 1% of all transactions. Still, as the July hack of major Twitter users to reap bitcoin demonstrates, digital currencies are popular with cyber criminals.
Cryptocurrencies have also been used for extremist groups’ financing. Last month, the US Department of Justice said it had targeted attempts by Hamas, al Qaeda and the Islamic State’s military arm to raise funds through cryptocurrencies.
The research found that only a fifth of respondents from financial and other private firms said that they regarded digital coins as an opportunity. The possibility that cryptocurrency could expand access to financial services was among the very few potential benefits they mentioned.
Over 550 responses from financial companies, law enforcement and financial watchdogs and legal and insurance firms were used as a basis for the study.