Law enforcement can learn how to track illicit activity, but outright crypto bans aren’t effective, a report commissioned by the EU’s monitoring body for drugs concluded.
A European Commission-funded report has called for tougher identity checks on crypto exchange users as regulators seek to combat the rising use of darknet marketplaces to buy illegal substances.
The report, commissioned by the European Monitoring Centre for Drugs and Drug Addiction, an agency of the European Union, comes as lawmakers in the bloc push for tougher anti-money laundering checks on transactions made using cryptocurrency – and it cautions that better police training could prove more effective than outright bans.
It is critical that countries around the world implement the recommendations from the Financial Action Task Force,” ensuring the users of exchanges, brokers and ATMs can be identified when they cash out illicit gains, it added.
Forbidding the use of cryptocurrency entirely does little to curb darknet activity, and police-led closures such as that of Hydra in 2022 tend to have only short-lived impacts, as other alternatives spring up to replace it.
EU lawmakers are 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.