Report: Illicit activity actually a tiny part of cryptocurrency use
- Emily Peck, author of Axios Markets
Illicit activities like cybercrime, money laundering and terrorist financing made up only 0.15% of all crypto transactions conducted in 2021, according to a new report from Chainalysis, a blockchain data platform.
Why it matters: This is a sign of crypto's growing mainstream popularity — and a rebuke to critics who say digital currency is mainly for criminals.
Yes, but: Crypto crime is at an all-time high in absolute terms, the report found. It's just that the growth rate of legitimate activity far outpaced the growth rate for illicit activity, Kim Grauer, director of research at Chainalysis, tells Axios.
The big picture: Crypto use soared in 2021. Transaction volume ballooned to $15.8 trillion up from $2.4 trillion in 2020.
- The growth was due, in part, to the growing popularity of decentralized finance, a term that encompasses all the bank-like activity that happens on the blockchain without a bank — like lending money.
Worth noting: Chainalysis acknowledges that the data could change with additional information. Last year, it reported that illicit activity made up 0.34% of 2020 crypto transaction volume, but revised that number upward to 0.62%.
- And one big scam can move the needle: The 2019 number was an outlier, the firm said, because of the "PlusToken Ponzi scheme."