A global crackdown of cryptocurrency usage may be looming, the chief executive officer of a top crypto exchange has warned.
CEO of Kraken, Jesse Powell, said governments around the world may start to clamp down on the use of digital currencies such as Bitcoin sooner than expected.
Powell, who heads the fourth-largest digital currency exchange in terms of trading volume, said regulatory uncertainty around cryptocurrencies will not go away.
He expects governments to impose sweeping regulations on the use of digital currencies to curb criminal activities such as money laundering and the funding of terrorist organizations.
"I think there could be some crackdown. I hope that the U.S. and international regulators don't take too much of a narrow view on this. Some other countries, China especially, are taking crypto very seriously and taking a very long-term view," Powell said.
International financial leaders such as U.S. Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde have expressed some concerns over the increasing use of bitcoins and other cryptocurrencies for money laundering and other illegal activities.
Earlier in the year, regulators in the U.S. have proposed the passing of a new anti-money laundering rule that would require people making transactions of more than $3,000 to submit to identity checks.
"Something like that could really hurt crypto and kind of kill the original use case, which was to just make financial services accessible to everyone," Powell said about the proposed rule.
Since the price of cryptocurrencies skyrocketed last year because of the pandemic, there has now been widespread adoption of digital currencies. The price of Bitcoin hit a record high of more than $61,000 last month. As of Tuesday, the world's most valuable cryptocurrency was trading at around $61,099.
Cryptocurrencies are attractive to criminals as it is effectively impossible to track. Its use has long been associated with illegal activities due to the fact that the identity of the sender and receiver are kept completely anonymous.
Blockchain research company Chainalysis said the use of cryptocurrencies for nefarious purposes has gone down over the years.
The company said illegal transactions only accounted for about 0.34% of all transactions this year, a big drop from the estimated 2% last year.