- Despite crypto bans, a recent EU report shows that the drug trade on the darknet remains resilient.
- Crypto restrictions may have limited impact, but the darknet trade continues growing.
Crypto has long been the target of regulators for its alleged role in facilitating illegal activities, including buying and selling drugs. However, new European data shows that regulatory efforts to stamp out crypto have not had the expected results.
A recent European Monitoring Centre for Drugs and Drug Addiction (EMCDDA) report examined the link between crypto and darknet markets (DNMs). These markets facilitate the illegal drug trade and a range of other illicit activities.
Sponsored
The 54-page report found that crypto bans “are not particularly effective” at preventing the use of DNMs in countries close to Europe.
Crypto Bans ‘Not Effective’ at Combating Darknet Trade
Eight countries in the EU’s neighborhood have banned crypto transactions. Yet despite these bans, the overall engagement with DNMs continues to grow in these countries.
“Eight of the 54 countries (~15 %) in the sample have outright bans on cryptocurrencies, yet engagement with DNM continues in these locations, particularly among those in the EU’s Southern Neighborhood,” the report says.
The region, including North Africa and The Levant, had a particularly stringent crypto policy. However, the outright bans have not affected the use of crypto on the darknet.
“It is telling that all the countries in the region except for Tunisia and Israel have banned cryptocurrency use within their respective jurisdictions, yet the trend in DNM revenue engagement remained positive in all these locations,” the report says.
Other countries close to Europe that banned crypto transactions are Kosovo, North Macedonia, and Turkey. Turkey implemented its ban on crypto payments in April 2021, which reduced payments to DNMs from the country.
“However, the rate at which DNMs sent cryptocurrency to wallets within Turkey does not seem to have been affected in any meaningful way,” the report says.
The EMCDDA report used data from Chainalysis and examined the traffic to and from DNMs from 2011 to 2021. The report covered the European Union and countries in the EU’s vicinity.
On the Flipside
- Instead of outright bans on crypto, the report suggests strengthening identity checks for crypto trades. This includes enforcing Know Your Customer (KYC) and Anti-Money Laundering (AML) rules.
- The growing trend of peer-to-peer exchanges, which the report identified, could make enforcing KYC very difficult.
Why You Should Care
The findings could influence the policy of the EU and its neighboring countries around crypto, making future crypto bans less likely in the region.
Read about how criminals are circumventing KYC checks:
Report: Scammers are Buying Dark Web KYC Identities for Crypto Theft
Read about the latest developments for Solana:
