The Metropolitan Police has ‘confiscated’ $250 million (£180 million) worth of cryptocurrency as part of an investigation into international money laundering, the force announced this week.
This is the second significant seizure by the Economic Crime Command in recent weeks, following a $160 million (£114 million) haul towards the end of June, in which a 39-year-old woman was arrested on suspicion of money laundering.
It has not been revealed how the digital tokens were confiscated, but the investigation presumably involved the accused’s digital wallets.
Detective Constable Joe Ryan told the press that the “seizure is another significant landmark in this investigation, which will continue for months to come as we hone in on those at the centre of this suspected money laundering operation”.
Some news outlets have reported that the seized currency was Bitcoin, though this was not confirmed by the Police.
That crypto token has rarely been out of the news this year, with its rollercoaster dips and surges in value, coverage of Elon Musk’s trading activities, and increased international crackdowns on mining.
Worldwide, regulators are grappling with the challenges of anonymous international transfers combining with the coin’s extreme attractiveness to speculators.
Money laundering, tax fraud, terrorist financing, and the enablement of drug trafficking have all been cited by authorities as concerns, though traditional money markets are hardly immune from those, or from corruption and market rigging.
Deputy Assistant Commissioner Graham McNulty said that organised criminals, terrorists, and drug lords are increasingly using cryptocurrencies to “launder their dirty money”, adding that cash remains king for them, as it is hard to track.
A key international shift against cryptocurrencies, and Bitcoin in particular, has taken place in China this year, where authorities have begun clamping down on mining operations.
This is significant, as according to the Centre for Alternative Finance at Cambridge University, two-thirds of Bitcoin mining has taken place in China (based on IP address and hash rate), with roughly 85 percent of the world total located in Asia and Eastern Europe.
According to the FT, the clampdown has spurred an exodus of large mining operations to countries that border on China, such as Kazakhstan, along with other locations, such as Ukraine, El Salvador, and even the US, which has had relatively few miners in global terms – roughly the same number as Iran, in fact.
Texas, one of the US’ key technology centres outside of California, is emerging as a new Bitcoin hotspot. Meanwhile, the FT reported this week that a Chinese logistics group is airlifting huge Bitcoin mining rigs to Maryland.
However, Beijing’s move against Bitcoin and other crypto tokens has less to do with local fears over unregulated activity and crime, and more to do with the government’s determination to establish the digital renminbi yuan as the de facto digital currency of choice for international trade.
China is ahead of the curve of global moves to launch central bank digital currencies (CBDCs), with the US, the eurozone, and the UK among the many actively exploring the concept.
The first country to attempt a large-scale launch will have a significant advantage on the world stage, as it could force other nations to use that currency to trade with it.
At present, it is almost certain that China, one of the world’s key manufacturing and outsourcing hubs, will win that race, with experimental quantities of the digital yuan already in circulation.
The UK, Europe, and the US may be up to five years behind, according to a source at the UK Treasury.
If CBDCs are successful and widely adopted, proponents claim that they could help the financially disadvantaged and unbanked, as well as make currency transfers much swifter, while being less prone to sudden peaks and troughs in value (Bitcoin lost one-third of its value in one day earlier this year).
Conceivably, some cryptocurrencies may come to be seen as short-lived harbingers of a wider, decentralised transformation of digital finance – one originally designed as a ‘people’s alternative’ to central banks, established political structures, and the power of the petrodollar.
However, crypto’s vulnerability to the whims of multibillionaires, adoption by offshore currency speculators, gamblers, and organised criminals, and popularity in wealthy, oil-producing states (often as a hedge against oil prices) suggest that the experiment has both proved the concept of digital currencies and replicated existing problems while making them much harder to tackle.
That said, digital tokens (including non-fungible ones) are becoming increasingly popular as virtual representations of a wide range of assets, while stablecoins (tokens commonly pegged to the value of fiat currencies) are also in widespread use – for now, at least.