Cryptocurrencies and Virtual Assets

Criminals, the corrupt and kleptocrats are always one step ahead. From cryptocurrency tumblers and mixers to so-called ‘pig-butchering’ scams, bad actors and hostile states continue to find ways to exploit virtual assets. Regulatory gaps, the patchy implementation of global standards and a lack of enforcement have meant that virtual assets can be misused to circumvent sanctions, obfuscate the source of stolen funds, generate revenue for illicit activities and undermine political integrity. This highlights the need for a coordinated international policy response and robust supervisory mechanisms.

As countries implement the Financial Action Task Force (FATF) standards for virtual assets and consider their own regulatory framework, it is essential that policymakers, regulators, law enforcement and the private sector keep pace with developments in the virtual asset industry and understand risks and seek mitigations. Effective regulation and supervision are essential to both prevent illicit activity, and foster trust in the industry.

Our work identifies emerging threats from virtual assets, and the new ways in which they can be exploited for criminal and malign purposes. We provide evidence-based insights to strengthen policy and operational responses and prevent the expanded abuse of virtual assets. Beyond virtual assets, our work also explores the security dimensions of digital assets and related topics, including stablecoins, Central Bank Digital Currencies, Decentralised Finance and the fragmentation of the payments ecosystem.