Lael Brainard, member of the U.S. Federal Reserve’s Board of Governors: One in four people who use Bitcoin are criminals

By Selena 12/19/19 3:21 AM

In a speech in Frankfurt, Germany, according to Lael Brainard, a member of the United States Federal Reserve’s board of governors, one in four Bitcoin users is a criminal. Brainard’s speech highlighted the risks from cryptocurrency, especially security and fraud.

Lael Brainard, Federal Reserve Governor (Image via Bloomberg)

The top risk comes from Bitcoin exchange security

According to Brainard, the Bitcoin network still contains a large number of users who have fraudulent and illegal behaviors. Not to mention that these people are likely to run exchanges in the market. Moreover, only one-third of exchanges require ID and KYC verification to deposit or withdraw money. The rest are not. Therefore, it is not surprising that cryptocurrencies are considered “insiders” for a significant amount of illegal activity.

According to Brainard, about 50% of Bitcoin transactions do not comply with the required law:

“One study estimated that more than a quarter of BTC users and roughly half of the bitcoin transactions, for example, are associated with illegal activity.”

The tone of the speech gives rise to misconceptions about Bitcoin’s real-world use. Studies of transactions often draw conflicting conclusions. For example, the lack of anonymity means that criminals still prefer cash.

However, in Brazil, as AZCoin News reported, fraudsters appear to be temporarily putting Bitcoin aside for a prepaid debit card. This means that the trend of phishing changes from day today. It is essential that lawmakers stay updated on the situation and promptly issue appropriate regulations.

If the scammers only target Bitcoin. This will be difficult for lawmakers because it is entirely impossible to say precisely how many people use Bitcoin. Because users can control many addresses.

The speech precedes the sweeping of new crypto regulations in force in the European Union. Benoît Coeuré, a member of the executive board of the European Central Bank (ECB), has been particularly critical of BTC, having previously described it as the monstrous birth of the financial crisis.