Hong Kong SAR Government Says Bitcoin Is Not Used for Gang Crime

Rage Comment : Governments, central banks and regulators in many countries and regions often accuse cryptocurrencies such as Bitcoin of being money laundering tools for criminal organizations, even though they do not provide evidence in many cases. This has led to the image that cryptocurrencies are closely associated with illegal activities. However, a recent report released by the Hong Kong Special Administrative Region Government expressed the opposite view, pointing out that after its investigation and research, cryptocurrencies have not been used by criminal gangs in Hong Kong and do not pose a threat to economic security.

No signs of money laundering

The Hong Kong SAR government released the Money Laundering and Terrorist Financing Risk Assessment Report 2018 on Monday, which examined Hong Kong's weaknesses and the risks it faces based on the recommendations of the Financial Action Task Force (FATF), an international body that combats money laundering and terrorist financing.

The report mentioned the issue of Bitcoin, noting that the Hong Kong Police Force's monitoring showed no obvious signs of cryptocurrency transactions involved in local gang crime or money laundering/terrorist financing activities. In addition, relevant investigations and intelligence also showed that cryptocurrencies were not used or would be used for other common criminal activities (such as drug and taxable goods smuggling) or terrorist financing. The report said that cryptocurrencies "have a low threat level." However, the Hong Kong SAR government did find that cryptocurrencies had been used as a pretext for Ponzi schemes or as a way to pay cyber criminals (mostly extortionists using ransomware).

No threat to the free economy

Interestingly, the report also explains why the use of Bitcoin should not be seen as a threat to governments that do not restrict the financial freedom of their citizens. “Hong Kong has one of the freest economies in the world, with a vibrant foreign exchange market and no capital controls.” Therefore, unlike in other economies where people try to circumvent currency controls or escape high inflation rates, cryptocurrencies are less attractive in Hong Kong.

The report shows that the Hong Kong SAR government's response to fraud is to issue warnings to the public to remind people to be vigilant when faced with invitations to invest in cryptocurrency, but only take action against real criminal acts. Unlike other governments in the region, Hong Kong does not believe that it is necessary to enact regulations to restrict the legal use of Bitcoin. It believes that existing laws and regulations on fraud and other crimes are sufficient to cover all illegal acts, whether or not they involve cryptocurrency.