Get Into Cryptocurrency Trading Today

A survey has revealed that financial firms (FIs) and government consider cryptos as risky. The study by RUSI and ACAMS, in partnership with YouGov, involved 566 participants. They were professionals from the government, financial institutions, and the private sector. The private sector players include financial regulators, crypto exchanges, and financial intelligence units. 

Even though growing, the risk of cryptos remains. Most of the FIs and governments worry about the risk of criminal activities. They believe illicit use is a significant risk. 

The illegal crypto use concern is valid given recent tribulations. Crypto has been ideal for money laundering. Its decentralized nature makes it suitable for anonymous transactions. Most of the users rely on this to avoid the formal financial system. 

The outlawed sects like terror groups use cryptos for funding. They rely on crypto's anonymity to fundraise and use the currencies in the dark market. 

Countries also use the same crypto features to beat economic sanctions. Venezuela has now resorted to Bitcoin and Ethereum after its Petro cryptocurrency failed. North Korea and Iran also use the cryptos in evading sanctions. 

The criminal risks have seen most countries move to regulate digital assets. The European Union has a proposal to control digital assets. It plans to manage all aspects of digital currencies. Nigeria's SEC has also announced plans to regulate the cryptos. The regulations will apply after the coins become securities. 

Here is an in-depth look into survey results;

Cryptocurrencies as an alternative to Fiat Currencies 

The use of crypto as an alternative for fiat currencies has been on the cards for some time. Several entities have been calling for crypto to become a legal tender. Most of the respondents consider digital assets too volatile. 69% of the population sited volatility as the primary concern. 

A larger population from the crypto sector (76%) believes it is useful as an alternative tender. This is different from the players in the financial industry (44%).  The majority of crypto professionals also believe it is ideal for inclusion (89%). 

The traditional financial sectors feel cryptos are not ready for financial inclusion efforts. Only 47% from the government, 42% FIs and 52% from the private sector support the cryptos on inclusion. 

Risk or Opportunity 

Cryptos come with a fair share of both risks and opportunities. It offers the possibility of high returns. 

The sector keeps attracting new users leading to more demand. An increase in need with a similar supply leads to a higher value. Still, cryptos are quite volatile, and investors risk losing money. It also has risks in criminal activities and scams. 

Only the cryptocurrency industry players view the coin for its opportunities.  More than 80% of the industry believes its an opportunity. This is an overwhelming majority against the other sectors. Only 20% of the private sector, 19% FIs, and 23% government view cryptos as an opportunity.

The other sectors favor cryptos to be more of a risk. 59% of the private sector, 63% FIs, and 56% of the government consider cryptos risky. They credit the risk in the form of a lack of consumer protection. Criminal activities also play a role in the views of non-crypto participants. 

Types of Criminal Activities 

As a significant risk, it is ideal to understand the criminal activities implications. It is one of the issues the different sectors tend to agree upon. They all believe the illegal activities are a risk in cryptos. 

The majority of the correspondents rate the crypto use in money laundering (84%). Cryptos on the dark web (84%) comes next, followed by purchasing illicit goods (83%). The use of cryptos by sanctioned actors (82%) and terrorist organizations (79%) is also a concern for many. The other problems include its use in human trafficking (76%) and the initial coin (ICO) scams (75%). 

Compared to other sectors, the virtual currency industry is more worried about sanctions evasion. 

The respondent rate stablecoins the same as payment tokens for criminal activities. They believe they pose similar challenges. 

Cybercrime is another issue as cryptos are online-based. Users state online fraud (74%) and ransomware (73%) as the top crypto cybercrime concerns. 

Regional Perception by Banks 

One of the main uses of cryptos is cross-border money transfers. Transferring fiat currencies between borders is expensive. There is a need for costly foreign exchanges. Cryptos, on the other, have a single form globally. There is no need for currency exchange, hence valued retention. 

The different regions still have had varying perceptions towards the digital currencies. The survey considered different financial institution players from various regions. The first concern was the understanding of risks. North America (43%) and Europeans (48%) FIs understand the risks more than the Asians (38%).

The Asian FIs (43%) are more friendly towards the cryptos.     They find the cryptos easier to use than fiat currency. The European and the American FIs on the other trust more in the fiat currencies. Only 9% of American and 15% European FIs find cryptos easier to use than the fiat currencies. 

The Asian FIs industry players believe more in the future of the cryptos. 46% of them think cryptos have a role to play in the financial inclusions. They also believe the cryptos will keep becoming more comfortable to use.

Future of Cryptocurrency 

All these concerns and views lead to the future of the cryptocurrency. The survey looked into the future of digital currency in the next five years. Most of the correspondents agree cryptos will be a financial tool in the next five years. 

Most of the population (81%) think cryptos will be viable as a tool for financial inclusion. Most believe the currency's primary use will be for investment and speculation. The next possible service is on the day to day operations, followed by use for illicit purposes. 

The crypto industry feels the digital coins will be functional for day-to-day operations. 

Bottom Line 

Cryptocurrency is fast becoming part of the mainstream economy. All the economic sectors are already adopting virtual currencies. 

Governments are looking into the possibility of central bank-backed coins. The financial sectors are looking to include them as payment platforms and exchanges. 

Still, the risks remain high. As it becomes more mainstream, the regulations become tighter.  Either way, the cryptos have an assured future. 

Buy & Sell Cryptocurrency Instantly