Countering Money Laundering and Terrorist Financing: A Case for Bitcoin Regulation

Research in International Business and Finance, Forthcoming

34 Pages Posted: 16 Jan 2024

See all articles by Emily Fletcher

Emily Fletcher

Johns Hopkins University

Shaen Corbet

Dublin City University ; University of Waikato - Management School

Charles James Larkin

Institute for Policy Research (IPR), University of Bath; Trinity College Dublin

Date Written: December 24, 2023

Abstract

Bitcoin was created in 2008 to serve as an alternative payment mechanism for both the under-banked and un-banked or those in regions where the formal financial system suffers from broad corruption and efficient regulation. However, criminals and terrorists quickly exploited Bitcoin's unique properties, namely its peer-to-peer nature and pseudo-anonymity, to facilitate extensive terrorist financing and money laundering schemes. Government reactions to safeguard national security interests have been extremely varied, ranging from outright bans to passive tolerance. This inconsistency stems from how to classify Bitcoin effectively. On one side are those who argue Bitcoin is a currency, and on the other are those who claim it is a type of asset. In the US alone, these discrepancies have led to a bureaucratic turf war between different regulatory bodies, namely the Financial Crimes Enforcement Network, the Commodity Futures Trading Association, the Securities and Exchange Commission, and the Internal Revenue Service. This study seeks to move beyond the existing legal frameworks, arguing that Bitcoin should be classified as a technology and regulation should rest with private sector technology companies.

Keywords: Money laundering; Terrorist Financing; Cryptocurrency; Regulation

Suggested Citation

Fletcher, Emily and Corbet, Shaen and Larkin, Charles James, Countering Money Laundering and Terrorist Financing: A Case for Bitcoin Regulation (December 24, 2023). Research in International Business and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4674925 or http://dx.doi.org/10.2139/ssrn.4674925

Emily Fletcher

Johns Hopkins University ( email )

Baltimore, MD 20036-1984
United States

Shaen Corbet (Contact Author)

Dublin City University ( email )

Dublin 9
Ireland

University of Waikato - Management School ( email )

Hamilton
New Zealand

Charles James Larkin

Institute for Policy Research (IPR), University of Bath ( email )

10 West
Claverton Down
Bath, BA2 7AY
United Kingdom

Trinity College Dublin ( email )

AAP College Green
Dublin 2
Ireland

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