SlowMist has been analyzing the attacks and major incidents of 2023.
SlowMist‘s latest report will focus on the anti-money laundering (AML) trends in the blockchain sector for the same year.
Thanks to the support of our InMist Intelligence Network partners, SlowMist aided clients, partners, and publicly hacked entities in “freezing over 12.5 million U.S. dollars in funds throughout 2023.”
There were 31 incidents in 2023 “where victims of attacks were able to recover all or part of their lost funds.”
The total stolen funds amounted “to approximately 384 million U.S. dollars, of which 297 million was successfully recovered, accounting for 77% of the stolen amount. In these 31 incidents, the funds of 10 protocols were fully returned.”
As explained by SlowMist, Anti-money laundering (AML) is “a systematic project wherein governments use legislative and judicial powers, mobilize relevant organizations and commercial entities to identify possible money laundering activities, handle related funds, and punish involved institutions and individuals.”
This is done to prevent criminal activities. Internationally, both money laundering and anti-money laundering activities primarily “occur in the financial sector, with almost all countries placing the AML responsibilities of financial institutions at the core. International cooperation in AML also mainly occurs within the financial sector.”
In recent years, money laundering crimes “have become more diversified and concealed, with trends increasingly using the difficulty of tracing virtual currencies to hide the origins of illegal funds. AML is becoming one of the biggest challenges faced by regulatory compliance institutions.”
In 2023, the world of cryptocurrencies continued “to experience turmoil and instability. During the previous crypto bull market, the actions of industry giants SBF and CZ seemed to have a significant impact on the market. However, in November, a federal grand jury found SBF guilty of fraud and conspiracy related to the collapse of FTX.”
Just a few weeks later, Binance accepted “the charges and paid a fine of $4.3 billion, with CZ agreeing to relinquish control over Binance. As the crypto asset industry fluctuates between a turbulent “crypto winter” and a bear market, governments and international organizations have adopted a more cautious approach. Regulatory policies on cryptocurrencies are still being gradually developed across various countries.”
The Navigating the Global Crypto Landscape with PwC: 2024 Outlook, released on December 19, reveals that in 2023, “as many as 25 countries and regions have developed legislation or regulations for stablecoins.”
These include Austria, The Bahamas, Denmark, Estonia, Finland, France, Germany, Greece, Japan, Luxembourg, Portugal, Spain, Sweden, and Switzerland. The majority of these jurisdictions have also “ensured or implemented all other scrutinized regulations, including a framework for cryptocurrency regulation, licensing or registration, and compliance with the Financial Action Task Force’s (FATF) Travel Rule.”
However, the report notes that “some major countries like the United States, the United Kingdom, and Canada have not yet finalized legislation for stablecoins or established a comprehensive regulatory framework for cryptocurrencies.”
In contrast, crypto-friendly countries/regions “like Singapore and the United Arab Emirates have adopted all cryptocurrency-related regulations except those pertaining to stablecoins.”
Of the jurisdictions analyzed, “about 18% or only 8 have not initiated any regulation for stablecoins. This group includes Bahrain, Brazil, India, Taiwan, Turkey, and others. Additionally, 23% of the reviewed jurisdictions, including Australia, Hong Kong, and Singapore, have commenced the regulatory process for stablecoins and are actively adopting relevant laws.”
SlowMist concluded that “due to the inherent complexity of cryptocurrencies, regulatory policy has become a multifaceted and complex discussion encompassing financial stability, consumer protection, and anti-money laundering.”
However, it is certain that “as blockchain and cryptocurrency technologies become more widespread, an increasing number of governments and institutions are getting involved, and regulatory policies are shifting towards more specific and global approaches.”
It is believed that the gradual clarification of regulatory rules will aid virtual asset service providers and financial institutions in “combating money laundering and illegal fundraising; it will also assist in sanction screening and transaction monitoring.”
As a security company in the blockchain industry, SlowMist says it will “actively respond to national regulatory policies and continue to vigorously promote technology applications related to regulatory compliance.”