Kidnapping…ransom…political power…
Somehow, these words do not seem so alien within the crypto world, and if anything, they are growing in commonality. With Bitcoin reaching highs of $100,000 worth and cryptocurrency increasingly being used for business transactions, the value and power of crypto have never been higher.
The prophetted ‘great financial equalizer,’ crypto’s power lies in its structure to decentralise value transactions and disrupt traditional banking. But in the shadows of that idealism, a different reality is taking shape. Increasingly, crypto is being wielded as an invisible weapon for political opportunities, crime, and unethical business ventures. Its pseudonymity, lack of regulations, and ability to transcend borders make it the perfect tool—not for liberation, but for control.
In many ways, cryptocurrency is beginning to resemble a “mafia currency”—shielded from oversight, leveraged by those seeking to operate in the gray zones of legality and ethics.
But
Let’s get one fact straight from the offset: these issues are not exclusive to crypto. Money is power and corruption and criminal activity thrive in the cracks of power. However, what makes crypto so enticing is its lack of regulatory framework and its potential ability to give individuals control over a currency. A characteristic that politicians have started to take note of.
Trump’s crypto strategy
Once calling bitcoin “not money” and “based on thin air”, Donald Trump since has made a complete U-turn on crypto, accelerating US bitcoin mining and establishing a peaked $58 billion-worth crypto empire. Having vowed to embrace crypto at the currency’s largest Bitcoin conference in 2024, Trump has since signed Executive Order 14178 to revoke restrictions on crypto. To further his crypto plans, Trump appointed crypto-pro officials like Paul S. Atkins and David O. Sacks to build his crypto empire.
This seems positive. Crypto is spreading globally, and investing early, embracing the new technology, and developing frameworks to integrate crypto into the market looks to be correct. However, there is a catch…
American Bitcoin and $TRUMP
Trump’s crypto empire extends beyond his cryptocurrency $TRUMP, which already makes headlines by offering the currency’s top holders a dinner with the president. It’s a tool that many consider to be a political strategy to entice top investors to side with Trump. However, the larger emerging controversy is the continual growth of American Bitcoin, a Bitcoin mining company of which the Trump family holds 98% ownership.
This is an issue.
Having money centralised under banks and regulated by laws and frameworks means that money remains a source of value exchange. However, by decentralising value in the form of crypto and allowing an individual to own a currency, crypto becomes a direct tool for influence and power. By having a controlling stake in a growing bitcoin mining firm and owning part of the crypto network in the form of $TRUMP, Trump may have future political power over currency.
That is the current true power of crypto, and governments are aware of it.
The regulatory race
In an effort to prevent exploitation of the market via crypto, governments are looking to regulate and standardise digital currencies. Similar to the EU’s Markets in Crypto-Assets Regulation (MiCA), the UK has revealed plans for a “comprehensive regulatory regime” to align crypto with full-weight security regulations. Governments aim to balance regulations to foster continued innovation surrounding crypto and reduce the risk of fraudulent digital currencies and exploitation of assets.
Businesses will struggle to ignore the emerging digital currency market as more business is conducted online and internationally, accounting for around 29% of business activity worldwide. Businesses find appeal in the fast and liberal transactions crypto has to offer, providing accelerated and more flexible dealings, especially overseas. However, forming robust frameworks and regulating such a rapidly evolving landscape is challenging. Governments look towards solutions to both manage the emerging crypto market and protect existing currencies. Stablecoins are already an existing strategy to combat the issue, providing a digital coin that relies on stabilisation tools to maintain a stable value relative to official currencies or assets. However, stablecoins lack monetary sovereignty and transparency, an issue that the EU is looking to rectify with the digitisation of existing currency.
Countries like Nigeria and Jamaica already have digital currencies like eNaira and JAM-DEX with countries like China, Japan and India close to rollouts of their own. To keep up with the market, the EU is in the process of developing what it’s calling the digital euro. Unlike cryptocurrencies, the digital euro would be a liability of the European Central Bank, just like euro banknotes and coins. It would, therefore, be subject to the same regulations as the physical currency and would be readily accepted as a valid form of payment. As a digital currency, the digital euro would enter the space of crypto, aiming to appeal to the same market with the added benefit of regulation-ready currency and trusted, transparent transactions.
Trust and security is becoming key in the crypto conversation with crypto’s digital and decentralised nature allowing for rapid, hard-to-trace international payments. This makes it increasingly popular with criminal activity and unethical business.
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The dark side of crypto and the need for regulations
The total cryptocurrency market capitalisation stands at approximately $3.38 trillion, with cryptocurrencies like Bitcoin, Ethereum, and Solana accounting for most of the market share. The increase in value and the digital nature of crypto means ransomers are increasingly showing a preference for cryptocurrencies like bitcoin as a form of payment. Kidnappers are targeting large players in the cryptocurrency world, with crypto millionaires and influential crypto players proving popular targets. Its pseudonymity makes it difficult to track, leaving it exposed to exploitation via money laundering and illicit trade. In 2024, it is estimated illicit transactions accounted for a record $51 billion. Furthermore, terrorist groups like Hamas and ransomware groups have been caught with crypto wallets, used to purchase or fund weapons, or used as a money laundering platform. Although crypto only accounts for around 0.47% of money laundering activity worldwide, high-profile cases like North Korea’s Lazarus Group’s heist of $1.5 billion worth of crypto prove crypto is a viable avenue for criminal groups.
However, the most common abuses of crypto are fraud and Ponzi schemes. It seems like a weekly occurrence that another cryptocurrency is found to be a scam. HAWK token, OneCoin, BitConnect, and FTX are just some of the high-profile fraudulent crypto cases that have emerged. Perhaps most famously, FTX, once the second-largest crypto exchange, was found accountable for $8 billion in customer funds as the company secretly used customer funds to cover losses at its trading firm, Alameda Research. Others simply fake the cryptocurrency, with OneCoin capitalising on $4.4 billion from falsely marketed revolutionary crypto that turned out to be a fake.
The issues highlight crypto’s largest asset as a digital currency as both its strongest case for and against its validity. A lack of transparency and public knowledge around crypto means that it is both the government’s interest and duty to navigate how to integrate crypto into the public. Providing a more regulated and transparent digital currency landscape brings about investor confidence, public safety of personal assets, and monitored legal transactions whilst embracing a future of value exchange.
Where does that leave crypto on the world stage?
Crypto is here to stay.
It has the potential to provide access to exchange currency to a larger global audience. It aims to level the competitive playing field and give users more independence over their money, undeniably proving a huge appeal to businesses and individuals. During the early phases of crypto adoption, it is important to keep the positives in sight as, just like the internet, what first is criticised later is refined and has the potential to reshape society.
However, potential investors need to keep in mind the current volatility of cryptocurrency and its inherently unstable, unmonitored status. Governments are racing to get ahead of the crypto curve so as to not fall short of business and to capitalise on a new source of capital. What will be important is to evaluate where traditional banks and currencies will fall, and in turn, the assets associated with such currencies.
It is yet to be seen whether crypto will remain a source of corruption and exploitation but what is certain is that both individuals and governments want to capitalise on its potential.
Editor’s Note: The opinions expressed here by the authors are their own, not those of impakter.com — Cover Photo Credit: Kanchanara
