CryptoCurrency Framework: how to Avoid Criminal Activity?

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Updated: Mar 28, 2022
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Cryptocurrency is virtual currency where the exchange of it relies on people sharing and buying it. Most cryptocurrencies have a set amount meaning the amount of the currency is not infinite making it similar to precious metals while other places like central banks can make an infinite amount of money these are called fiat currencies. All transactions made through Bitcoin or other altcoins are stored in the blockchain.

The blockchain is basically a digital ledger where transactions are stored publically and chronologically.

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Cryptocurrency has been on a rise ever since it came out and the price of it keeps on rising. For example, Bitcoin which was the first cryptocurrency their price rose 2000% through the year of 2017. Bitcoin today has the price of 5,406 US dollars and the prices of popular altcoins like litecoin is 42 dollars, and Ethereum has the price of 176 dollars. Alt-coin is alternative cryptocurrency that came after bitcoin. There are many altcoins out there however in 2017 “Ripple” experienced the most growth of 36,018% throughout the year.

Bitcoins price between December 2017 to February 2018 fell an absurd amount of 64.5%. This, however, is nothing new for cryptocurrencies which are accustomed to many price crashes which can be contributed to market manipulation by bots or wealthy crypto traders. Bots are “automated traders that buy and sell automatically.” Bots are prone to causing market crashes because they are programmed to automatically buy or sell when a certain “trigger” happens. An example of bots causing market crashes is the 1987 black Friday wall street crash, during this crash, equities dropped over 30% due to the first generation of bots. Cryptocurrencies, in general, have little to no government regulation, and that is what is concerning to the UN. Cryptocurrencies are prone to active criminals, for example, a company called “Bitconnect” is being sued as a Ponzi scam where it lost investors up to $771,000.

Another example is a company called Coincheck Inc. based in Tokyo lost a little over half a billion dollars worth of customers cryptocurrency to hackers. Price manipulation is where wealthy investors are able to artificially inflate or deflate the market. One investor in 2013 was able to raise the price of Bitcoin from $150 to $1000 by himself. Cryptocurrencies like Bitcoin and Monero are very popular among money launders because of the anonymity of it. Money launders essentially have their own bank because of the fact that cryptocurrencies are decentralized networks they have no regulation by government agencies or central banks.

Monero is an altcoin that is entirely encrypted with no possibility of people tracing back a transaction directly to the person. This is an important problem to solve because this year alone it is projected that 1.5 billion dollars of money will be laundered through cryptocurrencies. This is on top of the fact that 1.21 billion dollars were laundered through cryptocurrencies over the past two years. However cryptocurrencies can provide lower, third world countries to even the playing field. It will allow nations with poor monetary systems to join the global economy.

Provide banking for people without access to banks. Will connect countries who have never been connected before. Some coins are traceable like Bitcoin and others. All coins are going to have some sort of digital trail for every transaction. The designer of the Blockchain can allow as much or as little privacy as they’d like.

The digital trail could be the transaction ID, wallet addresses, however, some of it is encrypted and untraceable. There are over 35 million cryptocurrency wallets and 13 active Bitcoin users on Coinbase. Coinbase is the world’s largest brokerage and wallet platform for digital currencies. UN Involvement The UN has not passed any resolutions regarding cryptocurrency and its framework, however, it has not been standstill with the topic.

Two of the leading experts in the Crypto world met at the UN in New York to discuss Bitcoin, blockchain and the Crypto market at a development policy seminar to help educate UN DESA members. February 1st, 2013 the UNODC worked with the OSEC, trained law enforcement to counterattack money laundering in Bitcoin. They trained over 30 officers in a simulation to trace Bitcoin or other altcoin transactions that are suspect to money laundering.

The use of Blockchain technology in the UN is already becoming very popular and promising. A UN desk review submitted in 2017 shows the many different committees of the UN are planning on, already using, or would benefit from using Blockchain technology. One example is after a pilot trial using Blockchain technology WHO was able to provide food for 10,000 Syrian refugees in Jordan. Furthermore, the United Nations Conference on Trade and Development are planning a proof of concept for an “E-trade for all” using Blockchain technology.

The World Food Program or (WFP) successfully completed a trial using Ethereum which is an altcoin. The WFP was able to send humanitarian aid to people in Jordan using Ethereum. This is a great success because it essentially cuts out the middleman and saves money. Using the Blockchain technology the UN only has to pay directly to a company or person instead of having to go through banks which can have extra fees or it takes longer for the money to be approved. However, with the Blockchain technology, it cuts time and cuts cost when paying the buyer directly.

CipherTrace is a company that combats money laundering in Cryptocurrency using blockchain forensics to allow users of Bitcoin and other altcoins to safely and legally use Crypto. Bakkt is a Crypto company that is working towards becoming the first federally regulated Cryptocurrency exchange. A cryptocurrency that is federally regulated is a great advancement because it reduces the ability for money laundering and other illegal activity. Although, this being federally regulated goes against the main thing that made cryptocurrency so attractive which is anonymity and it being a decentralized network which is why it was so attractive in the first place.

Austria is becoming very involved with cryptocurrency and is becoming a country that is planning on regulating it. Austria is planning on using the model based off selling gold and derivatives. Its biggest concern is trying to stop money laundering and its plan is to regulate traders by requiring them to identify all parties that are involved with a trade and also for all trades that exceed 10,000 euros or more they are required to bring it to a government financial unit.

The government of Austria will also bring over the same rules on market manipulation, insider trading and frontrunning to the digital currency market. Austrians can now buy multiple altcoins like Ethereum, Litecoin and many more in more than 4000 post offices. People looking to buy cryptocurrency can buy it in three values which are 50, 100, and 500 euros. Austria is currently in the process of adding more restrictions to the buying and selling of cryptocurrency because board directors of the Financial Market Authority (FMA) say that distributors of cryptocurrency will have a concession obligation and will be treated as securities. Another thing that the FMA doesn’t agree with is that people need a mini bank license for the buying and selling of foreign currency however with cryptocurrency they don’t have one.

Austria is also planning on using Eretheum to track 1.3 billion dollars worth of government bonds. Austria is using Ethereum Blockchain technology to help manage the funds. Solutions The first solution that Austria proposes is a regulation on blockchains and that all created blockchains must be in some way traceable. When creating any type of cryptocurrency the creator of the blockchain is able to programme as much or as little traceability for the coins transactions.

Austrias solution for this is that all newly created coins must have a guideline in which a certain level of traceability is available. Monero is an altcoin which is completely untraceable meaning all transactions involved in this blockchain is completely unknown, which is generally a hub for criminal activity to swarm because they can get in the way of it. Austria has already made the rules that all cryptocurrency traders and investors must have all parties that are in a trade to be known and identified. This law on top of regulating the traceability of new crypto coins would make it a lot easier know who the suspect is if involved in illicit activity.

The road blocks for this solution is it being passed through all countries and being agreed upon. Also the fact that coins that have already been made with no traceability can’t be changed. The other solution that Austria proposes is a federally regulated blockchain. Using a federally regulated blockchain like the company “Bakkt” is using will significantly reduce the amount of criminal activity. Creating a federally regulated blockchain solves many problems that occur in the crypto world like money laundering because criminals would not be able to do this if the blockchain is federally regulated.

However many users are attracted to Cryptocurrency because of the fact that it is decentralized and isn’t backed by any sort of government. So it becoming federally regulated causes it to lose its appeal to traders who can just go on to a different altcoin that is decentralized. The final solution that Austria proposes is to start introducing companies to accepting cryptocurrency as a form of payment for actual products.

This is already starting to be done in the U.S. where an example is the Dallas Mavericks basketball team allows selling bitcoin as a way to buy tickets. Allowing cryptocurrency as a form of payment now is just an early push before it becomes one of the only forms of payment. The roadblocks for this solution is the fact that most companies might not be able to accept cryptocurrency as a form of payment and the fact that if the other problems of crypto is not fixed first it can actually cause more harm than good because criminal activity would skyrocket. Austrias plan in committee is to stay on policy which is stay heavy on cryptocurrency regulations. Austria plans on providing ideas for new regulations in crypto to avoid criminal activity.

Works Cited

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  4. Martucci, Brian MartucciBrian. “What Is Cryptocurrency – How It Works, History & Bitcoin Alternatives.” Money Crashers,
  5. Milano, Annaliese. “Austria Planning New Regulations for Cryptocurrency, ICOs.” CoinDesk, CoinDesk, 23 Feb. 2018,
  6. “Study Highlights Growing Significance of Cryptocurrencies.” University of Cambridge, 4 May 2017,
  7. Tam, Timothy. “How Bots Are Manipulating Cryptocurrency Prices.” VentureBeat, VentureBeat, 15 Dec. 2017,
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CryptoCurrency Framework: How to Avoid Criminal Activity?. (2019, Sep 08). Retrieved from