Blockchain analytics firm Chainalysis predicts a shift in cryptocurrency regulation. CEO Michael Gronager envisions AI-driven oversight within five years. He shared his insights at a recent industry conference in Singapore.
Gronager believes AI agents will soon scan blockchains for illicit activity. "It's not much further away," he told reporters. This technology could aid prosecutors and tax authorities in their investigations.
The CEO sees crypto becoming the preferred method for solving financial crimes. He cites its scalability, ease of use, and transparency as key advantages. The international scope of blockchain data adds to its appeal for investigators.
Gronager argues that AI automation would streamline the process. It could prevent overlapping efforts between government departments, and the technology might even identify tax evaders in the crypto space.
However, those who cashed out years ago may escape scrutiny. Gronager acknowledges past challenges in crypto tax compliance. "There's a likelihood that you ended up not paying your tax, not because you didn't want to, but because you didn't know how to," he explained. The landscape has changed. Legal and software tools for crypto taxes have improved. Gronager believes this eliminates excuses for non-compliance. Some tax authorities already employ AI to track potential evaders.
Privacy remains a concern in the industry. Gronager notes that mixer protocols and privacy-focused cryptocurrencies could hinder AI tracking. Yet, he reports that privacy transactions now account for less than 1% of all crypto activity. The absolute volume of crypto crime is growing, according to Chainalysis. A recent report from the firm reveals significant illicit fund movements. Nearly $100 billion has been transferred from known criminal wallets since 2019.
Despite this, Gronager sees limited growth in privacy-focused cryptocurrencies. He contrasts their trajectory with the broader crypto market. "If you look at privacy coin growth over the last five to 10 years, that has not followed the same growth path as virtually everything else," he stated.
The CEO's predictions suggest a future where blockchain transparency paradoxically enhances law enforcement capabilities. As AI technology advances, the crypto industry may face increased scrutiny and regulation.