During the House Subcommittee on Digital Assets, Financial Technology, and Inclusion hearing held on Nov. 15, Alison Jimenez, an economist and president of Dynamic Securities Analytics, Inc., provided insights into the context of crypto crime, breaking down illicit activities in the realm of digital assets.
John Reed Stark, a former Chief at the SEC Office of Internet Enforcement, suggests this is a breath of fresh air, as unlike other witnesses in the hearing, Jimenez was not bought or paid for by crypto firms.
In the hearing, Jimenez shares that analysts will often contend that the transparency inherent in blockchain technology renders cryptocurrency less conducive to illicit financial activities.
Applying a similar line of reasoning, Jimenez shares that various features of traditional financial instruments could be viewed in a similar light. For instance, the bulk and weight of physical currency, the potential reversibility of wire transfers, dollar limits on Zelle transactions, the fixed physical location of real estate, and the personal information printed on checks all present limitations.
Her conclusion is that no single factor serves as an absolute deterrent, and bad actors persist in exploiting various financial products for illicit purposes.
The President of Dynamic Securities Analytics goes on to share that in response to increasing scrutiny from blockchain analytics and tracing efforts; various malicious actors have adapted their cryptocurrency transaction methods to minimize exposure.
In her conclusion, Jimenez shares that it is crucial to recognize their limitations as they, at most, capture just a fraction of the entire picture and cannot offer a comprehensive analysis of cryptocurrency use in illicit finance.
This is underscored by the assertion that if tracking cryptocurrency were as straightforward as suggested, the numerous ransomware attackers, numbering in the tens of thousands, would be consistently apprehended.
This hearing is believed to be much needed by many regulators, as further evidenced by a Jan. 12 report by Chainalysis, which highlighted the prevalence of cryptocurrencies in various illicit activities.