Darcy W E Allen, Alastair Berg, Brendan Markey‐Towler
We apply institutional cryptoeconomics to the information problems in global trade, model the incentives under which blockchain-based supply chain infrastructure will be built, and make predictions about the future of supply chains. We argue blockchain may fundamentally change the patterns and dynamics of how, where and what we trade by: (1) facilitating new forms of economic organisation governing supply chain coordination (e.g. the V-form organisation) (2) shifting economic power towards the ends of supply chains (e.g. primary producers) by decreasing information asymmetries (3) de-commoditising goods and disaggregating price signals by changing the dimensions along which goods may be reliably differentiated and (4) lowering reliance on proxies (e.g. production within national borders) for the quality of goods.
Cecilia Anthony Das, Krishna Prasad, Shibley Sadique
This paper seeks to review the current regulatory regime governing cryptocurrencies, namely Bitcoin, in United States, United Kingdom, Canada and Singapore, and traces the regulatory trend in those identified countries. These developments are compared to the Australian context. From the comparative analysis conducted be-tween regimes available in other jurisdictions and those in Australia, the authors conclude that the Australian regulatory regime in relation to cryptocurrency, in particular Bitcoin, are comparable in some respects and in others are much progressive. This is specifically in light of the 2017 amendments relating to anti-money laundering legislation which places Australia as a strong forerunner to legislate on Bitcoin and anti-money laundering legislation. However, to successfully achieve this, Australia must address its lag in relation to the classification of Bitcoin and cryptocurrency respectively. As such, it is concluded that the regulatory regime of cryptocurrency both internationally and at the Australian level is far from satisfactory.
Thiago Bottino do Amaral, Christiana Mariani da Silva Telles
EnglishThe purpose of this article is to study bitcoins in order to verify (i) whether it serves as an instrument for the practice of money laundering; (ii) how national and international regulators are positioning themselves on the issue; and (iii) propose regulatory alternatives. The paper is divided into five parts, which demonstrate how Bitcoin System works and discusses whether, in the context of money laundering crime, bitcoins differ from traditional assets such as electronic money, cash, artwork and precious metals. Aspects related to the pricing of bitcoins and their anonymity are also discussed. Regulation is analyzed through the examination of the measures adopted in Brazil, in the United States and in the framework of the Financial Action Task Force (Gafi/FATF). Finally, alternatives are presented with the purpose of contributing to the improvement of regulation. portuguesO presente artigo tem por objetivo estudar os bitcoins com o fim de verificar (i) se a citada criptomoeda pode servir como instrumento para a pratica do crime de lavagem dinheiro; (ii) como os reguladores nacionais e internacionais estao se posicionando sobre o tema; e (iii) propor alternativas regulatorias. O artigo e dividido em cinco partes nas quais se demonstra como funciona o Sistema Bitcoin e se discute se, no contexto do crime de lavagem de dinheiro, a citada criptomoeda se diferencia de ativos tradicionais como moedas eletronicas, dinheiro em especie, obras de arte e metais preciosos. Sao tambem discutidos aspectos relacionados com a fixacao do preco dos bitcoins e com o seu anonimato. A regulacao da materia e analisada por meio do exame das medidas adotadas no Brasil, nos Estados Unidos e no âmbito do Grupo de Acao Financeira Internacional/Financial Action Task Force (Gafi/FATF). Por ultimo, sao apresentadas alternativas com o proposito de contribuir para o aprimoramento da regulacao.
The advent of Bitcoin and other forms of cryptocurrency has left a permanent mark on the world as we know it, regardless of what percentage of the populace will ever touch or comprehend cryptocurrency in its lifetime. Thanks to the advent of blockchain technology, cryptocurrency has given rise to expedited international exchanges, increased protection of consumer identity, and secured methods for logging transactions. But cryptocurrency’s nebulous nature makes it inherently vulnerable to a slew of hacks, cyberattacks, and run-of-the-mill theft. Moreover, its indeterminate qualities make cryptocurrency incredibly difficult for federal law to wrangle. But, perhaps most chillingly, the rise of cryptocurrency has given organized crime a new look, swapping society’s Kuklinskis1 and Capones2 for pseudonymous sleuths and computer-clad criminals, and underground operations for “dark web” schemes that transcend international borders at the click of a button. This Recent Development will examine how organized crime leverages cryptocurrency, and how U.S. federal law can adapt to stop it.
The rise of centralized mining pools for risk sharing does not necessarily undermine the decentralization required for permissionless blockchains: Each individual miner's cross-pool diversification and endogenous fees charged by pools generally sustain decentralization, because larger pools better internalize their externality on global hash rates, charge higher fees, attract disproportionately fewer miners, and thus grow more slowly. Instead, mining pools as a financial innovation escalate the arms race among competing miners and thus significantly increase the energy consumption of proof-of-work-based consensus mechanisms. Empirical evidence from Bitcoin mining supports our model predictions. The economic insights inform many other blockchain protocols as well as the industrial organization of mainstream sectors with similar characteristics but ambiguous prior findings.
With the explosion of Bitcoin, various cryptocurrencies are beginning to garner incredible amounts of attention from speculators and institutional investors alike. Simultaneously, the rise in the number of occurrences of cyber ransom attacks has proven to be an increasingly relevant part of the conversation in the formative years of the Bitcoin ecosystem, as hackers demand payments be in the form of bitcoin. To test the relative impact of these different ransom events on the price of bitcoin, this paper conducts an event study to quantify the reaction by investors upon revelation of the news. In addition, it examines differences between Bitcoin and two other cryptocurrencies, Ethereum and Litecoin, to control for any liquidity effects of victims buying up large sums of bitcoin. The findings of the study indicate that following the ransom events there is a positive price reaction, supporting the claim that investors in Bitcoin generally perceive these events as good news. This could have a profound effect on the development and further adoption of cryptocurrencies, as regulators try to determine whether or not to intervene.
This thesis will examine the ways in which various cryptocurrencies have impacted certain traditional crimes. While crime is always evolving with technology, cryptocurrencies are a game changer in that they provide anonymous and decentralized payment systems which, while they can be tracked in a reactive sense via the blockchain, are seen by criminals as having better uses for them than traditional fiat currencies, such as the ability to send money relatively fast to another party without going through an intermediary, or the ability to obscure the origin of the money for money laundering purposes. Every week there are new cryptocurrencies flooding the market, and it doesn’t look like it will abate any time soon. Blockchain technology, the underlying technology behind all cryptocurrencies, has uses that far surpass just the currency aspect. Criminals also see the potential that sending money anonymously, without a middleman beholden to regulations and tracking those transactions has. Any new technology while being revolutionary, will always trickle down to seedier elements of society who will always find a use for it. This paper will look at how cryptocurrencies have impacted drug trafficking, money laundering, and ransomware. I will also explore a new kind of crime called cryptojacking that has become possible because of cryptocurrency mining. Law enforcement may be playing a reactive and not a proactive role in the age of cryptocurrencies, but this paper will provide information that can be useful for law enforcement and applicable to their investigations.
Cryptocurrencies are private, decentralized currencies that operate via the Internet and have attracted criminals because of the convenience and virtual anonymity they offer. While there are many descriptive accounts of cryptocurrencies and their use both in legal and illegal operations, to date there is no empirical research to understand the use of cryptocurrencies in transnational crime operations, specifically why transnational criminals may find them attractive to either conduct business or to launder their illicit proceeds. Using the environmental criminological framework, this study analyzed 100 cases of cryptocurrency use in transnational crime activities identified through various secondary sources, including online newspaper articles and publicly available court case information. Essentially this study used both quantitative and qualitative analysis to examine the ways in which cryptocurrencies facilitate transnational crimes. The findings indicate that criminals have been using cryptocurrencies to conceal the enormous amounts of money they are receiving for their crimes, specifically money laundering, drug trafficking (illicit drug sales), and terrorism financing. It was found that offenders can conduct business, launder money, and make a profit by using cryptocurrencies to facilitate their crimes, creating for crime opportunities permitted by cryptocurrencies. These opportunities include the ease of floating from one crime to another and using cryptocurrencies to cover offenders’ tracks, where cryptocurrencies can transact, launder, and conceal all in one. It was found that offenders gravitate towards using bitcoin to facilitate their operations, most likely due to its popularity and reliability. When looking at the crime of money laundering and illicit drug sales specifically, it was found that offenders can generate higher operation amounts, spanning into billions of dollars, all while evading detection. With the assumption that transnational criminals are rational beings, money laundering using cryptocurrencies has enormous benefits with these high operation amounts. This coupled with the low chances of being caught by law enforcement, makes money laundering a feasible crime where the benefits far outweigh the risks. This exploratory research is innovative and imperative to expanding academic knowledge on the evolution of crime with the use of cryptocurrencies and assisting in reducing the opportunities cryptocurrencies allow in transnational crime operations.
Bitcoin is a decentralized, pseudonymous, virtual currency which has been linked to many nefarious activities, such as money laundering, ransomware demands, and the purchase of contraband goods and services. Although it has many redeeming features such as low transaction costs, no charge-backs, and service to the world’s 2.5 billion unbanked, the public has become aware of Bitcoin through spectacular news stories of corruption and criminal activities. Techniques to investigate Bitcoin and to identify its users are therefore required to enforce laws and protect the public. This paper discusses what Bitcoin is and how it works, and explores various investigative methodologies to perform Bitcoin network analysis, transactional analysis, and wallet analysis. Finally, this paper discusses emerging issues and suggests areas for improvement with the goal of gaining general acceptance of investigative techniques for admissibility as scientific evidence in courtroom testimony.
Bitcoin emerged as a cryptocurrency relying on new blockchain technology in 2009, but how to regulate it was not immediately clear. The recent emergence of bitcoin futures poses a new level of risk to the economy, again raising questions of regulation. This is the first law review article to examine the potential regulatory regime for bitcoin futures.