Cryptocurrency markets have became a convenient channel through which terrorists and other criminals can funnel their money. It gives them a chance to move their money around without the type of oversight they would have to deal with in traditional banks. Governments around the world, though, are obviously not happy about that, so the markets are now feeling pressure to achieve closer compliance with the money laundering laws that are already in place.
Governments object to the fact that these markets will accept payments from anywhere in the world because ‘anywhere in the world’ includes places that the international community at large has imposed sanctions against. These sanctions can be imposed for various political reasons, often to punish governments of countries or to prevent terrorists and the militaries of hostile governments from getting the money needed to fund violence.
But preventing people in sanctioned countries from participating in crypto-markets is harder than it may sound. The traditional way of tracking a person’s location digitally is by monitoring a person’s IP address – basically your computer’s address within the web of the Internet. But virtual private networks (VPNs) are widely available, allowing a person to hide their location or mislead anyone looking into thinking they are located somewhere else. It’s often possible to see through these VPNs, but a person (or market in this case) has to choose to do so. The effort must be put in to make sure that the location of the people participating in their markets are not in sanctioned countries. From a financial perspective, the markets have no incentive to make that effort, so it falls upon governments to pressure them into caring about the issue.
