October 11, 2018 | Council on Foreign Relations

Financial Authorities Confront Two Cryptocurrency Ecosystems


Within the cryptocurrency space, two separate ecosystems are evolving. This will likely require strategies from financial authorities looking to counter illicit finance threats. One ecosystem is the above ground, formal sector of cryptocurrency companies that largely accommodate anti–money laundering/know-your-customer (AML/KYC) regulations and are working to promote a business culture of compliance, which this arena mostly lacked in its earliest years. The other ecosystem is underground and consists of actors, platforms, and tokens that are more resistant to the regulatory pressures that undercut anonymity. This underground environment is currently smaller and much less developed than the formal one, but it offers little to no corporate accountability to law enforcement and will likely enable substantial illicit financing should it scale up.

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Blockchain and Digital Currencies Cyber