Rising Cryptocurrency Investment Accelerates Your Risks

Rising Cryptocurrency Investment Accelerates Your Risks

Digitization is behind the increase in this type of investment, as it has facilitated access to Fintechs, especially services related to these digital currencies and payment methods. Almost 4.4 million Spaniards have made an investment in cryptocurrencies despite a lack of knowledge about taxation, supervision and, above all, the risks involved, according to Asufin, the Spanish Association of Financial Users, in its “III Report on Knowledge and Habits Fintech’ . For the first time, the report included a section dedicated to investing in virtual currencies, in which it highlights that almost 71% have invested more than 1,000 euros, and more than a quarter of investors have invested more than 6,000 euros, despite the fact that only 59% are aware of the dangers involved in this type of investment.
In terms of knowledge about investment platforms, those responsible for the study particularly note that, on the one hand, almost 70% of these investors consider that the platforms where they invest are supervised by an official monetary entity such as the Bank of Spain, the Central Bank European Commission or the National Securities Market Commission (CNMV), compared to 21% who are unaware. On the other hand, there is a huge lack of knowledge about the tax implications of these assets, with 41% of these users believing they are exempt from paying tax on gains from these types of investments, while 28% claim to know nothing about it whatsoever.
Finally, the Association emphasizes in its study that there is no regulation of cryptocurrency service providers, which makes it difficult to control them, as they go beyond the powers of official inspection bodies. It should not be forgotten that cryptocurrencies are a digital medium of exchange, which do not physically exist and are currently not controlled by any official body. Nor are they considered an official means of payment, with one exception: in September 2021, the government of El Salvador decided to include Bitcoin as a legal tender in the country.
Higher popularity, higher risk
According to Banco Santander, these decentralized assets are based on Blockchain for the control of these virtual transactions, as this technology does not allow changes to their records or their deletion, and to reverse a transaction it is necessary to carry out the reverse transaction. However, while digitization has brought widespread use of technology along with greater knowledge about it, the same cannot be said for knowledge of these virtual assets.
In addition to the high volatility of these cryptocurrencies, they are increasingly being used by cybercriminals, so much so that thefts and scams that occurred in 2021 amounted to about US$ 14 billion. A record year, again, compared to the 7.8 billion recorded in 2020, (i.e. a not-so-insignificant growth of 79%), surpassing the previous record of 2019 and 11.7 billion.
According to a report by the platform Chainanalysis, these cryptocurrencies were used to carry out scams, steal funds and finance terrorist activities. Firstly, scams amounted to US$7.8 billion, while thefts reached US$3.2 billion, an increase of 82% and 516%, respectively, over illicit transactions in 2020. One of the most notorious frauds , according to the platform, was a project that capitalized on the success of the ‘Squid Game’ series and managed to attract an investment of around three million dollars in total, passing it off as a legitimate project, before the criminals made all the money disappear. .
It’s not a new problem by any stretch
The relationship between cryptocurrencies and cybercriminals is not new. So much so that, in 2017, the Spanish Public Ministry of Cybercrime proposed the need for legal reforms to facilitate the prosecution of this type of crime and those related to online identity theft. One of the issues under discussion at the time was what to do with the seized cryptocurrencies, proposing the transfer of this virtual money to legal tender to consign them or to make digital wallets.
Interpol supports member countries in a variety of ways to handle cases related to the dark web and cryptocurrencies, working with the private sector and academic institutions to make the latest and most relevant information available to law enforcement around the world. The intergovernmental organization has been involved in the development of a blockchain analysis tool called GraphSense, which allows researchers to track cryptocurrency transactions, meaning that researchers can follow the trail of virtual money as it allows searching for cryptocurrency addresses, tags, and transactions. to identify clusters around an address.

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