You want to tackle the fentanyl crisis? Print smaller bills
CRYPTO VS CASH
There is an interesting case in Wales (where I’m from), in which a drug smuggling gang used the crypto exchange Coinbase to launder their profits. This provides further evidence for the commonly expressed concern about the role that cryptocurrencies play in helping criminals to hide their profits.
- “In an attempt to hide the substantial amounts of money from law enforcement, friends and family were recruited to move crypto currency from account to account,” said Millie Davies of the Crown Prosecution Service.
Meanwhile, over in the United States, Senator Elizabeth Warren has called for stricter regulation on crypto exchanges to prevent fentanyl smugglers from using them to launder their illegal revenues. She quoted a report published last month by Elliptic and another one by Chainalysis, which concluded that tens of millions of dollars’ worth of fentanyl or precursor chemicals appear to have been paid for with cryptocurrencies — an impressive piece of investigation. Considering the damage that fentanyl is doing to the U.S., it’s unsurprising that Warren should be focusing on this challenge.
However, I’d like to keep things in perspective. Analyses of the U.S. drug market suggest it is worth $150 billion a year to the criminal gangs. Therefore — with the best will in the world — interrupting the laundering of a few million dollars’ worth of crypto is neither here nor there, in the grand scheme of things.
So what is important? As of last month, there were $2.34 trillion worth of U.S. banknotes in circulation — a sum that has nearly doubled over the past decade, just as it had, more or less, doubled in each of the previous two decades. At a time when the use of cash in everyday, legitimate transactions is in steep decline, there can only be one explanation for why demand for paper money is so healthy. It remains ever more central to the gray and black economies, particularly since more than 80% of it exists in the form of $100 bills. The inescapable conclusion is that the U.S. Federal Reserve is merrily printing out the money that allows criminals to circumvent other agencies in the U.S. government, thus indirectly helping to contribute to the 100,000 American deaths resulting from fentanyl overdoses last year alone.