We had an Interview with the World-wide famous Anti-Money Laundering (AML), Cryptocurrencies Forensics and Blockchain Threat Intelligence company, CipherTrace. Mike Cowans shares his thoughts about Cryptocurrency and Money laundering, regulation and much more. Please have a look.
Mike Cowans (Regional Director at CipherTrace)
Interview Date :10th January 2020
Kind of coins used for Money Laundering
Any coin or token could potentially be used for fraud. However, the principle here is “ the more utilized the coin, the higher the risk” for it being used for cyber fraud activities. We can see that with an incident that Ethereum had not so long ago, about 4 million dollars were lost due to illicit activity. As with most money laundering incidents, if there is no demand for it and if people are not invested in it, there is no point in laundering that exchange. However, If there is demand and also volume in the market for it, this will make it easier for criminals driving them to money laundering.
Anonymity is personally identifiable information. In other words, having those more intimate details around transactions are not visible and cannot be identifiable. I think that this would be the definition for mainstream anonymity. If we look at the information on a ledger, we can all agree that a transaction happens but we would not be able to know between who it happened. So, having security and transparency around the transaction but not the exact details between the individuals is very special feature of cryptocurrency. This is also something that intrigues people into this industry because they have their little space of privacy without any centralized body invading our privacy. I think everybody is entitled to it.
The need for travel rules
If we look at FATF, more than whether they accept new memberships or form some kind of an union with another party, that it’s more about the function that they provide. That will continue to be important and it is very much needed. Leading the global regulators and examining cryptocurrency market specifically on how travel rules work, and making recommendation to global regulators on the types of laws that should be issued are only some of their function. That I think is a important functionary. FATF has done great work in the last years. There are a lot of discussions around travels rules, but travel rules are not something new to cryptocurrency at all. It’s been there for decades in the more traditional financial ecosystem like in the fiat currency. If we look at in the fiat world, we cannot trace any transactions or the flow of money without the travel rules. So, we can make it easier for both the fiat ecosystem and cryptocurrency as it does make it easier for entities to transfer money and trace transactions. Thus, without travel rules in place, it will just erase the legitimacy of cryptocurrency.
Decentralized by design
Functional aspects of decentralization will always remain. That’s going to be by its design from a functional standpoint. There always will be some people who will argue that with more regulations developed it will remove some aspects of anonymity making it less decentralized. But I personally disagree with that and hope it remains. Decentralization in it self is not a bad thing, and people know that there are some disadvantages and problems happening, however points of failure are certainly found with centralization as well. So, I think that the good aspect of decentralization will always remain with a balance of regulations.
Cryptocurrency is definitely regulated and its continuing to develop. Regulations are coming in more and more frequencies. We can see with the travel rules, it has been very clear that there is a demand for it. Every country has a different idea concerning having regulation or not in terms of cryptocurrency whether its Japan, US, or Singapore. There is no right way of regulation or no regulation as the solution. I think those are things in the past and regulations are going to be implemented and develop even more from now on.
The challenge of making annual reports
It definitely is a challenge. That’s something that we are constantly doing. The reports are usually about 40-50 pages. By the time we released Q4 2019, we were already working on the Q1 2020, so it never stops. This is due to the market changing and growing very fast so we have to be aware of what is happened in present times in the ecosystem. It is not just a matter of what exchanges are doing, but it’s also a matter of what regulators, retail investors, criminals, institutes are doing, and accurately analyze these activity data to make clear what is happening. Thus, we produce it quarterly and it is challenging but we feel it provides an important service since cryptocurrency regulations are moving extremely quickly.
I have been with CipherTrace for not too long. The company itself is just a little over 5 years old, and my personal encounter with CipherTrace was only 4 months ago. Prior to that, I was working for ripple in the Sales and Marketing department. With CipherTrace, I was impressed with their technology, their view of the market and the solutions the company offers around helping to break legitimacy and make regulations work, and obviously AML and KYC and compliance monitoring are all very key things to effectively meet regulations. I wanted to see the cryptocurrency ecosystem grow and be embraced.
I got excited with what CipherTrace was able to do and how powerful CipherTrace’s solution is in terms of being been able to trace cryptocurrency transactions, categorize difference entities on various blockchains, be able to look at different entities, cryptocurrency business and exchanges that are on the blockchain, be able to look at their profile and to really get an determination of the type of activities the entities they work with are doing on the blockchain: whether they are legitimate actions, or high risk exchanges. Researching on those subject is extremely powerful. With seeing those actions and understanding what they bring to the cryptocurrency ecosystem, they are actually generating a big demand on the industry for solutions. This is what really brought me to CipherTrace.
Interviewer , Editor : Lina Kamada
The Article published on this our Homepage are only for the purpose of providing information. This is not intended as a solicitation for cryptocurrency trading. Also, this article is the author’s personal opinions, and this does not represent opinion for the Company BTCBOX co.,Ltd.