A new report commissioned by the European Monitoring Centre for Drugs and Drug Addiction, an agency of the European Union, has called for stricter identity checks on cryptocurrency exchange users in order to combat the increasing use of darknet marketplaces to purchase illegal substances. The report, funded by the European Commission, also highlights the need for better police training to be more effective than outright bans. The report, authored by Kim Grauer and Eric Jardine of Chainalysis, a blockchain research platform that provides blockchain analytics solutions to regulators, cites the use of darknet marketplaces as persistent and rising in spite of enforcement efforts.
The report cautions that countries around the world should implement the recommendations from the Financial Action Task Force to ensure that users of exchanges, brokers and ATMs can be identified when they cash out illicit gains. The authors of the report argue that forbidding the use of cryptocurrency entirely does little to curb darknet activity, and police-led closures tend to have only short-lived impacts, as other alternatives spring up to replace them. However, investigators can also improve their ability to respond by requiring training on the technologies that are being employed and the new investigative techniques necessary for conducting these sorts of investigations, the report said, citing skills such as using encrypted platforms, and how to trace and seize crypto.
The report’s findings come as lawmakers in the European Union push for tougher anti-money laundering checks on transactions made using cryptocurrency. The European Parliament is due to vote next week on landmark new licensing rules for the crypto sector, which would include identity checks on users transferring funds. The European Parliament has also pushed to impose upper limits on anonymous crypto transactions as part of a wider money-laundering overhaul.
The report’s authors argue that the rising use of darknet marketplaces to buy illegal substances is a significant problem that requires a coordinated response from regulators and law enforcement agencies around the world. They also note that the use of cryptocurrency is not inherently problematic, but that it can be used to facilitate criminal activity if not properly regulated. The report calls for a more nuanced approach to regulating cryptocurrency, one that takes into account the potential benefits of the technology as well as the risks.
The report’s findings are likely to be of interest to regulators and law enforcement agencies around the world, who are grappling with the challenges posed by the rise of cryptocurrency and the use of darknet marketplaces to facilitate illegal activities. The authors of the report argue that better police training and more effective regulation of cryptocurrency exchanges are key to combating these problems, and that a more coordinated approach is needed to tackle the issue.
In conclusion, the report highlights the need for improved identity checks on cryptocurrency exchange users and better police training to combat the increasing use of darknet marketplaces to purchase illegal substances. The authors of the report argue that a more nuanced approach to regulating cryptocurrency is needed, one that takes into account the potential benefits of the technology as well as the risks. The report’s findings are likely to be of interest to regulators and law enforcement agencies around the world as they grapple with the challenges posed by the rise of cryptocurrency and the use of darknet marketplaces to facilitate illegal activities.