Preventing criminal activity with cryptocurrency

Cryptocurrencies have transformed finance, enabling decentralized, anonymous transactions without banks. While reducing transaction costs and enhancing accessibility, they have also been misused for criminal purposes. This thesis examines blockchain’s key features—decentralization and anonymity—and cryptocurrency's evolution from niche digital assets to mainstream tools, alongside regional regulations and financial crime involvement. Focusing on cryptocurrency’s role in crime, this research explores how the secrecy of coins like Bitcoin and Monero supports money laundering, terrorism financing, fraud, drug trafficking, and ransomware. High-profile case studies reveal challenges in tracking transactions and linking addresses to identities. International policies, national approaches, and collaborations are reviewed, highlighting regulatory inconsistencies and law enforcement's role in prosecuting cryptocurrency crimes. The thesis also explores technological solutions, including blockchain-based Know Your Customer (KYC), Anti-Money Laundering (AML) measures, and machine learning to detect suspicious activities. It addresses the tension between preventing crime and maintaining privacy within cryptocurrency. Finally, future trends, such as Central Bank Digital Currencies (CBDCs) and blockchain innovations, are examined for their potential role in crime prevention and regulatory support. This research emphasizes the need for effective policies to balance cryptocurrency's promise with crime prevention efforts.