History of Cryptocurrency in Timeline
Cryptocurrency, or crypto, is a digital currency operating on a decentralized network, independent of central authorities like banks or governments. It functions as a medium of exchange and has become its own asset class in finance. Unlike traditional assets like equities or commodities, specific sectors within the cryptocurrency market are not yet formally defined.
1983: Birth of Ecash
American cryptographer David Chaum conceptualized ecash, a cryptographic electronic money system, in 1983.
1995: Digicash: Early Cryptographic Payments
David Chaum implemented ecash through Digicash in 1995. This early cryptographic electronic payment system prioritized user privacy by requiring specific encrypted keys and user software.
October 1996: NSA Publishes Cryptocurrency Research
The National Security Agency released a paper in October 1996 through an MIT mailing list, detailing a cryptocurrency system.
April 1997: NSA's Cryptocurrency Research Goes Public
The NSA's paper, "How to Make a Mint: The Cryptography of Anonymous Electronic Cash," was published in The American Law Review in April 1997, making their cryptocurrency research publicly available.
1998: B-Money and Bit Gold: Precursors to Bitcoin
Wei Dai proposed "b-money," an anonymous distributed electronic cash system, in 1998. Subsequently, Nick Szabo introduced Bit Gold, another electronic currency system requiring proof of work, foreshadowing Bitcoin's emergence.
1999: Dot-com Bubble Compared to Cryptocurrency
In 1999, the dot-com bubble, characterized by speculative investment in internet companies, drew comparisons to the rise of cryptocurrencies. Critics like Howard Marks highlighted the rapid price increases and subsequent crashes in both markets as evidence of an unsustainable bubble.
2008: The Rise of Altcoins
Following Bitcoin's innovation, cryptocurrencies other than Bitcoin started to emerge and became collectively known as "altcoins" or "alternative cryptocurrencies."
2008: Satoshi Nakamoto on Libertarianism
In 2008, Bitcoin's founder Satoshi Nakamoto expressed support for the idea that cryptocurrencies align with libertarian ideals. He stated, "It's very attractive to the libertarian viewpoint if we can explain it properly." This highlighted the ideological underpinnings of Bitcoin's creation.
January 2009: Bitcoin's Genesis
Satoshi Nakamoto, a pseudonymous developer, launched Bitcoin in January 2009, utilizing the SHA-256 cryptographic hash function for its proof-of-work scheme.
2009: Concerns Arise Regarding the Use of Cryptocurrencies in Illicit Activities
As the popularity of cryptocurrencies grew since Bitcoin's creation in 2009, concerns emerged regarding their potential misuse for illicit activities, leading to calls for increased regulation and scrutiny.
2009: Bitcoin's Debut
Bitcoin, the first cryptocurrency, emerged as open-source software in 2009.
April 2011: Namecoin: Decentralized DNS
Namecoin was launched in April 2011, aiming to establish a decentralized DNS system.
October 2011: Litecoin Enters the Scene
Litecoin debuted in October 2011, employing the scrypt hash function as an alternative to Bitcoin's SHA-256, enabling faster transaction confirmations.
2011: Cryptocurrency Market Volatility
The cryptocurrency market experienced its first major bubble and crash in 2011.
2011: Start of Period with Frequent Cryptocurrency Security Breaches
The year 2011 marked the beginning of a period when security breaches at cryptocurrency exchanges and storage providers became more frequent, leading to significant losses for users. This trend continued until at least 2019.
August 2012: Peercoin and Hybrid Consensus
August 2012 saw the launch of Peercoin, introducing a hybrid consensus mechanism combining proof-of-work and proof-of-stake.
October 2013: Silk Road Shutdown and Proliferation of Dark Markets
The shutdown of the original Silk Road dark web marketplace in October 2013 had unintended consequences, leading to a proliferation of similar platforms. Within a year, the number of prominent dark markets increased from four to twelve, and the number of drug listings surged from 18,000 to 32,000, highlighting the resilience and adaptability of online black markets operating with cryptocurrency.
2013: Cryptocurrency Market Fluctuations Continue
The cryptocurrency market went through another cycle of growth and retraction, marked by a bubble and crash between 2013 and 2014.
February 2014: First Bitcoin ATM Launched in the United States
Jordan Kelley launched the first Bitcoin ATM in the US on February 20, 2014, in Austin, Texas, marking a significant step in cryptocurrency accessibility.
February 2014: Mt. Gox Bitcoin Exchange Collapses
The collapse of Mt. Gox, then the world's largest Bitcoin exchange, in February 2014, due to a massive theft, highlighted the security risks and volatility associated with early cryptocurrency markets.
March 2014: US IRS Classifies Bitcoin as Property for Tax Purposes
In March 2014, the US Internal Revenue Service (IRS) clarified the tax treatment of Bitcoin, classifying it as property and subjecting it to capital gains tax, providing clarity for taxpayers.
August 2014: UK Explores Cryptocurrency's Role
In August 2014, the UK Treasury initiated a study to evaluate the potential role of cryptocurrencies in the UK economy and the need for regulation.
2014: Banking Concerns and Lack of Consumer Protection in Cryptocurrency
Banks expressed reluctance to engage with cryptocurrency companies in 2014, with some refusing to do business with them altogether. Gareth Murphy, a senior banking officer, suggested that widespread cryptocurrency adoption could hinder economic analysis by obscuring financial data. Additionally, the lack of consumer protections like chargebacks, common in traditional finance, raised concerns about fraud and loss for cryptocurrency users.
2014: China's Central Bank Restricts Bitcoin Handling by Financial Institutions
China's central bank took early action in 2014, prohibiting financial institutions from handling Bitcoins, reflecting concerns about potential risks associated with the cryptocurrency.
2014: Founding of GAW Miners and ZenMiner
Homero Josh Garza founded the cryptocurrency startups GAW Miners and ZenMiner in 2014. The companies were later revealed to be part of a pyramid scheme.
2014: Cryptocurrency Market Fluctuations Continue
The cryptocurrency market went through another cycle of growth and retraction, marked by a bubble and crash between 2013 and 2014.
September 2015: Launch of "Ledger", an academic journal about cryptocurrency
September 2015 marked the establishment of "Ledger", a peer-reviewed academic journal. Published by the University of Pittsburgh, it focuses on the study of cryptocurrencies and related technologies.
2015: Garza Pleads Guilty to Wire Fraud
In 2015, Homero Josh Garza admitted that his companies, GAW Miners and ZenMiner, were involved in a pyramid scheme and subsequently pleaded guilty to charges of wire fraud.
January 2016: Environmental Impact of Proof-of-Work Cryptocurrencies
Between January 2016 and June 2017, proof-of-work cryptocurrencies like Bitcoin, Ethereum, Litecoin, and Monero added an estimated 3 to 15 million tons of carbon dioxide to the atmosphere. This period marked the beginning of growing concerns about the environmental impact of energy-intensive cryptocurrency mining.
2016: Ethereum Gains a Following
By 2016, Ethereum had gained the largest following of any altcoin, according to the New York Times.
June 2017: Environmental Impact of Proof-of-Work Cryptocurrencies
By June 2017, the environmental impact of Proof-of-Work (PoW) cryptocurrencies became increasingly apparent. Research indicated that these cryptocurrencies were significant contributors to greenhouse gas emissions, raising concerns about their sustainability.
September 2017: China Bans ICOs
In September 2017, China banned Initial Coin Offerings (ICOs), which caused an initial negative impact on cryptocurrency liquidity but eventually had a positive liquidity effect. This move aimed to curb speculative investments and protect financial stability.
November 2017: Tether Suffers $31 Million Hack
In November 2017, Tether, a stablecoin pegged to the US dollar, experienced a significant security breach resulting in the theft of $31 million worth of USDT, raising concerns about the security of stablecoins.
December 2017: Youbit Exchange Bankruptcy
Following two separate hacking incidents in December 2017, South Korean cryptocurrency exchange Youbit, owned by Yapian, was forced to file for bankruptcy. Despite the bankruptcy, customers were assured access to 75% of their assets.
December 2017: Nicehash Exchange Hack
In December 2017, Slovenian cryptocurrency exchange Nicehash was targeted by hackers who stole over $70 million worth of cryptocurrency. The hackers gained access to the exchange's system by compromising a company computer.
2017: Bitcoin Price Manipulation Using Tether Alleged
A 2017 research paper by University of Texas academics alleged that the price of Bitcoin had been artificially inflated using another cryptocurrency, Tether. This research suggested market manipulation and raised concerns about the stability and transparency of cryptocurrency markets.
2017: Cryptocurrency Compared to Ponzi Schemes and Bubbles
Cryptocurrency faced comparisons to Ponzi schemes, pyramid schemes, and economic bubbles like the housing market in 2017. Howard Marks of Oaktree Capital Management called digital currencies an "unfounded fad" and a potential pyramid scheme. He likened their price booms and busts to historical bubbles like the tulip mania, South Sea Bubble, and dot-com bubble.
2017: Previous UK National Risk Assessment on Crypto Assets
The UK's 2017 national risk assessment classified the risk of using cryptocurrencies for money laundering and terrorism financing as "low", indicating that it was not perceived as a major threat at the time.
2017: Cryptocurrency Market Experiences Growth and Crash
The cryptocurrency market witnessed significant growth followed by a crash between 2017 and 2018.
2017: Increased Demand for GPUs Due to Crypto Mining
The demand for graphics cards (GPUs) surged in 2017 as their computing power became highly sought after for cryptocurrency mining, leading to price increases and shortages.
January 2018: Coincheck Exchange Hack
In January 2018, Japanese cryptocurrency exchange Coincheck suffered a significant security breach, resulting in the theft of approximately $530 million worth of cryptocurrency.
February 2018: China Halts Virtual Currency Trading and Mining
In February 2018, the Chinese government halted virtual currency trading, banned ICOs, and shut down mining operations, leading to a shift in mining activity to other regions.
March 2018: Plattsburgh, New York, Imposes Moratorium on Cryptocurrency Mining
Plattsburgh, New York, placed an 18-month moratorium on cryptocurrency mining in March 2018 to conserve natural resources and address concerns about the city's character.
March 2018: "Cryptocurrency" Enters the Dictionary
The term "cryptocurrency" gained mainstream recognition in March 2018 when it was officially added to the Merriam-Webster Dictionary.
May 2018: Bitcoin Gold Hack and Delisting
In May 2018, the cryptocurrency Bitcoin Gold suffered a significant security breach where hackers manipulated transactions for their gain. The hack resulted in estimated losses of $18 million for various exchanges. Following the hack, Bittrex decided to delist Bitcoin Gold after the cryptocurrency platform refused to cover its portion of the damages.
June 2018: Hydro Quebec's Proposal for Crypto Mining
Hydro Quebec proposed allocating 500 megawatts of power to crypto companies for mining in June 2018, highlighting the growing demand for energy in the industry.
June 2018: Coinrail Exchange Hack
In June 2018, South Korean cryptocurrency exchange Coinrail experienced a hacking incident, leading to the loss of over $37 million in cryptocurrency. This event further fueled a cryptocurrency selloff, wiping out an additional $42 billion from the market.
July 2018: Bancor Exchange Hack
On July 9, 2018, cryptocurrency exchange Bancor, which had faced controversy for its code and fundraising practices, suffered a security breach resulting in the theft of $23.5 million worth of cryptocurrency.
September 2018: Sentencing of Homero Josh Garza
In September 2018, Homero Josh Garza, the founder of cryptocurrency startups GAW Miners and ZenMiner, was sentenced to 21 months in prison and three years of supervised release for his role in a pyramid scheme involving the companies.
November 2018: Bitcoin's Energy Consumption Raises Concerns
In November 2018, Bitcoin's annual energy consumption was estimated to be equivalent to that of nations like Jordan and Sri Lanka, generating 22-22.9 million tons of CO2. This revelation intensified the debate about the environmental sustainability of cryptocurrencies.
2018: Analysis of Bitcoin's Efficiency
A study in 2018 highlighted the efficiency challenges of Bitcoin, estimating a 1.4% welfare loss compared to a cash system and pointing to high mining costs.
2018: Switzerland's Regulatory Approach to ICOs
Switzerland gained attention as a hub for ICOs, with its regulatory agency FINMA taking a balanced approach and aiming to establish clear guidelines for cryptocurrency offerings.
2018: Bank for International Settlements Criticizes Cryptocurrencies
The Bank for International Settlements (BIS) published their annual report in 2018, which included a chapter outlining criticisms of cryptocurrencies. These criticisms included price volatility, high energy consumption, variable transaction costs, security concerns, vulnerability to debasement, and the influence of miners.
2018: UK Publishes Cryptocurrency Study Findings
The UK Treasury released the findings of its cryptocurrency study in 2018.
2018: Cryptocurrency Market Experiences Growth and Crash
The cryptocurrency market witnessed significant growth followed by a crash between 2017 and 2018.
2018: Rise in crypto-related suicides following market crash
The year 2018 witnessed a disturbing trend of increased suicides linked to cryptocurrency investments, particularly after a major market crash in August. South Korea, in particular, faced a crisis as crypto traders were put on "suicide watch." In response, a Reddit cryptocurrency forum began offering suicide prevention resources to support struggling investors.
July 2019: Bitcoin's Energy Consumption Highlighted
By July 2019, Bitcoin's electricity consumption was estimated to be approximately 7 gigawatts, drawing attention to the energy demands of cryptocurrency mining.
2019: Switzerland Implements FATF Travel Rule
In 2019, Switzerland became one of the first countries to implement the FATF's Travel Rule. The Swiss regulator FINMA issued guidance requiring VASPs to verify the identity of the beneficiary in cryptocurrency transfers.
2019: Wash Trading in Cryptocurrency
In 2019, studies revealed wash trading, an illegal practice in some places where buyers and sellers are the same entity, was used to manipulate cryptocurrency prices and inflate trading volume. One study suggested up to 80% of trades on unregulated exchanges could be wash trades, while a Bitwise Asset Management report indicated 95% of Bitcoin trading volume on CoinMarketCap was artificially generated.
2019: Significant Increase in Value of Stolen Crypto Assets
In 2019, there was a substantial increase in the value of crypto assets stolen through security breaches at exchanges and storage providers, with losses exceeding a billion dollars.
May 2020: Publication of IVMS 101
In May 2020, the Joint Working Group on interVASP Messaging Standards released "IVMS 101", a universal common language for sharing required originator and beneficiary information between VASPs. This development was communicated to the FATF and other financial regulators.
June 2020: FATF Travel Rule Update
In June 2020, the FATF updated its guidance to include the "Travel Rule" for cryptocurrencies. This rule requires VASPs to collect, hold, and exchange information about the originators and beneficiaries of virtual asset transfers. Standardized protocol specifications suggested using JSON for data relay.
September 2020: European Commission's Digital Finance Strategy
In September 2020, the European Commission released a digital finance strategy that included a draft regulation on Markets in Crypto-Assets (MiCA). This regulation aimed to establish a comprehensive regulatory framework for digital assets within the EU.
December 2020: IVMS 101 Finalization Status
As of December 2020, the IVMS 101 data model had not yet been finalized and ratified by the three global standard-setting bodies that developed it. This model aimed to standardize information sharing between VASPs.
2020: EU Report on Cryptocurrency Security Breaches
A 2020 report by the EU revealed that users had lost hundreds of millions of dollars worth of crypto assets between 2011 and 2019 due to security breaches at cryptocurrency exchanges and storage providers. The report highlighted an increase in the value of stolen assets, particularly in 2019, where over a billion dollars worth of crypto assets were stolen.
2020: Study Highlights Privacy Concerns in Cryptocurrencies
A 2020 study raised concerns about privacy in cryptocurrencies, demonstrating the limitations of anonymity techniques and prompting research into privacy-enhancing solutions.
2020: Arbitrage Opportunities in Crypto Markets
As of 2020, arbitrage opportunities existed in cryptocurrency markets due to price differences across various platforms, highlighting the potential for price discrepancies.
2020: US Attorney General's Report on Illicit Cryptocurrency Use
In 2020, the United States Attorney General's Cyber-Digital Task Force published a report identifying three main categories of illicit cryptocurrency use: financial transactions related to crimes, money laundering, and crimes directly impacting the cryptocurrency market. The report stressed the need to address these risks for cryptocurrency to reach its full potential and highlighted the legal and regulatory tools at the government's disposal to combat illicit activities.
2020: Hydra Marketplace and Cryptocurrency-Powered Dark Web Activities
In 2020, the dark web marketplace Hydra, which facilitates illicit transactions using cryptocurrency, reportedly processed over $1 billion in sales. The platform's requirement for sellers to liquidate cryptocurrency through specific regional exchanges made it difficult for investigators to track the flow of funds.
2020: Altcoins Gain Recognition
Paul Vigna of The Wall Street Journal recognized altcoins as "alternative versions of Bitcoin" in 2020.
2020: Start of RenBridge's Involvement in Money Laundering
RenBridge's involvement in money laundering activities can be traced back to 2020, eventually reaching at least $540 million by 2022. This period marked a significant escalation in the platform's exploitation for illicit purposes.
2020: Shiba Inu: The Rise of Another Memecoin
Shiba Inu, another meme-based cryptocurrency, was launched in 2020 and quickly gained traction as part of the memecoin trend.
2020: UK National Risk Assessment on Crypto Assets
The UK's 2020 national risk assessment upgraded the risk of using cryptocurrencies for money laundering and terrorism financing to "medium" from "low" in the previous 2017 report. This reflects growing concerns about the potential misuse of digital assets for illicit purposes.
January 2021: Mirror Trading International Scam
In January 2021, Mirror Trading International, another South African cryptocurrency platform, disappeared with $170 million worth of cryptocurrency. This added to the country's growing number of cryptocurrency-related scams.
January 2021: UK Mandates FCA Registration for Cryptocurrency Firms
Starting January 2021, the UK's Financial Conduct Authority (FCA) required all cryptocurrency businesses operating within the UK market to register.
January 2021: UK Consults on Cryptoassets and Stablecoins
The UK launched a consultation on cryptoassets and stablecoins in January 2021.
February 2021: BNY Mellon Enters Cryptocurrency Services
BNY Mellon, a prominent financial institution, announced its foray into cryptocurrency services in February 2021, signaling growing acceptance and interest in digital assets from traditional finance.
March 2021: South Korea's New Digital Asset Legislation
In March 2021, South Korea implemented new legislation to strengthen oversight of digital assets. This required digital asset managers, providers, and exchanges to be registered with the Korea Financial Intelligence Unit and meet various compliance standards, including real-name bank accounts for customers.
March 2021: Morgan Stanley Offers Bitcoin Funds to Wealthy Clients
In a significant move towards mainstream adoption, Morgan Stanley became the first major Wall Street bank to embrace cryptocurrencies in March 2021. They announced the offering of Bitcoin funds through three investment vehicles, catering to their wealthy clients with a high-risk tolerance.
April 2021: Venmo Integrates Cryptocurrency Buying and Selling
Expanding its services beyond peer-to-peer payments, Venmo added support for buying, holding, and selling cryptocurrencies on its platform in April 2021, making it easier for users to engage with digital assets.
April 2021: Africrypt Founders Disappear with $3.8 Billion
In April 2021, the founders of the African-based cryptocurrency exchange Africrypt, Raees Cajee and Ameer Cajee, disappeared with $3.8 billion worth of Bitcoin. This incident marked the largest cryptocurrency scam in South Africa.
May 2021: Energy Efficiency of Proof-of-Stake Blockchains Highlighted
In May 2021, a study on the energy efficiency of different blockchain networks highlighted that Proof-of-Stake (PoS) blockchains consume significantly less energy than Proof-of-Work (PoW) blockchains. This finding promoted PoS as a more environmentally friendly alternative to PoW.
May 2021: China Bans Financial Institutions from Cryptocurrency Services
On 18 May 2021, China banned financial institutions and payment companies from providing cryptocurrency transaction-related services. This led to significant price drops in major cryptocurrencies like Bitcoin, Ethereum, Binance Coin, and Dogecoin. The focus then shifted to regulating proof-of-work mining due to its environmental impact.
May 2021: US Treasury Targets Cryptocurrency Tax Evasion
The US Treasury Department, in May 2021, announced that it would require the reporting of cryptocurrency transfers worth $10,000 or more to the Internal Revenue Service (IRS) to address tax evasion concerns.
June 2021: Cryptocurrency Offered in 401(k)s
By June 2021, some wealth managers in the US began offering cryptocurrency as an investment option for 401(k) retirement plans.
June 2021: China's Bitcoin Mining Ban and US Emergence as Industry Leader
China's crackdown on Bitcoin mining in June 2021, driven by concerns over power consumption, led to the US quickly becoming the global leader in the industry. However, this shift raised concerns about the environmental impact of large-scale mining operations in the US.
June 2021: El Salvador Adopts Bitcoin as Legal Tender
El Salvador made history in June 2021 by becoming the first nation to recognize Bitcoin as legal tender following a vote by its Legislative Assembly.
June 2021: Binance Faces Regulatory Action in the UK
In June 2021, The UK's Financial Conduct Authority ordered Binance, the world's largest cryptocurrency exchange, to cease all regulated operations in the country.
June 2021: Basel Committee Proposal on Bank Cryptocurrency Holdings
On 10 June 2021, the Basel Committee on Banking Supervision proposed that banks holding cryptocurrency assets must set aside capital to cover all potential losses. This proposal suggested stricter standards than those applied to other assets.
July 2021: US Senators Call for Cryptocurrency Regulation
In July 2021, Senator Elizabeth Warren urged the Securities and Exchange Commission (SEC) to address concerns regarding the risks posed to consumers by the increasing use of cryptocurrency exchanges.
August 2021: SEC Chair Highlights Need for Cryptocurrency Legislation
SEC Chairman Gary Gensler, in August 2021, called for legislation to regulate "crypto trading, lending and DeFi platforms," citing the vulnerability of investors and potential risks associated with unregistered securities and stablecoins.
September 2021: China Cracks Down on Cryptocurrency Transactions
China, the largest cryptocurrency market at the time, declared all cryptocurrency transactions illegal in September 2021, intensifying its crackdown on the industry.
September 2021: China Declares All Cryptocurrency Transactions Illegal
In September 2021, the Chinese government declared all cryptocurrency transactions illegal, completing its crackdown on the cryptocurrency industry. This marked a significant move against digital assets in China.
October 2021: Systemic Risk in Bitcoin Highlighted by NBER Paper
A National Bureau of Economic Research (NBER) paper in October 2021 revealed a significant concentration of Bitcoin ownership, with the top 10,000 addresses controlling about one-third of all Bitcoin in circulation. This concentration, even more pronounced among miners, raised concerns about systemic risk and market manipulation within the Bitcoin network.
October 2021: Mastercard Partners with Bakkt for Cryptocurrency Platform
Mastercard, a global financial services company, announced a partnership with Bakkt in October 2021 to develop a platform for cryptocurrency services. This collaboration aimed to enable banks and merchants on the Mastercard network to offer cryptocurrency transactions, further integrating digital assets into the mainstream financial system.
October 2021: First Bitcoin ETF Launched on NYSE
The first bitcoin-linked exchange-traded fund (ETF) began trading on the NYSE in October 2021, under the ticker "BITO," marking a significant milestone in cryptocurrency adoption and regulation.
December 2021: Monkey Kingdom NFT Phishing Attack
In December 2021, Monkey Kingdom, a Hong Kong-based NFT project, fell victim to a phishing attack, resulting in the loss of US$1.3 million worth of cryptocurrencies. The attacker used a malicious phishing link to gain access to the project's funds.
2021: Defining Altcoins
A 2021 thesis from the Polytechnic University of Catalonia broadened the definition of altcoins to include all cryptocurrencies other than Bitcoin, recognizing the growth of the cryptocurrency market beyond Bitcoin.
2021: Bitcoin's Carbon Footprint Compared to Greece
Bitcoin's carbon footprint in 2021, equivalent to Greece's emissions, solidified its position as an energy-intensive technology. Consuming between 91 and 177 terawatt-hours annually, it highlighted the need for more sustainable approaches to cryptocurrency mining.
2021: Recent Cryptocurrency Market Volatility
From 2021 to 2023, the cryptocurrency market faced another period of volatility, including a bubble and crash.
2021: Ransomware Revenue Linked to Russia and Cryptocurrency Adoption
In 2021, a significant portion of ransomware revenue, approximately 74% or over $400 million worth of cryptocurrency, was traced back to strains of ransomware likely associated with Russia. This highlighted Russia's role as a hub for cybercriminal activities. Paradoxically, Russia also emerged as a leader in the legitimate adoption of cryptocurrencies, driven by factors such as the instability of the ruble and President Putin's support for reducing reliance on dominant reserve currencies.
2021: Chainalysis Report on Illicit Cryptocurrency Activities
In 2021, blockchain analysis firm Chainalysis reported that illicit activities, including cybercrime, money laundering, and terrorism financing, accounted for a mere 0.15% of all cryptocurrency transactions, totaling $14 billion. This suggests that while concerns about the use of cryptocurrency for illegal purposes exist, the actual volume of such activities remains relatively small compared to legitimate use.
2021: Chainalysis Report on Money Laundering and DeFi Theft
In 2021, blockchain data company Chainalysis reported that criminals laundered a staggering US$8.6 billion worth of cryptocurrency, representing a 30% increase from the previous year. Notably, the report found that cybercriminals primarily utilized a small number of centralized exchanges to move illicit funds, with these exchanges receiving 47% of all funds sent from crime-linked addresses. Additionally, DeFi protocols emerged as a prime target for theft, with approximately $2.2 billion embezzled from these platforms in 2021, accounting for 72% of all cryptocurrency theft during that year.
2021: Backlash against Bitcoin donations due to environmental concerns
In 2021, there was a significant backlash against Bitcoin donations, particularly due to the environmental impact of its energy consumption. Several organizations chose to stop accepting Bitcoin, with some exploring "greener" cryptocurrency alternatives. Notably, Greenpeace's U.S. arm ceased accepting Bitcoin donations after seven years, citing the unsustainable energy demands of the cryptocurrency.
2021: Global Cryptocurrency Regulations Vary Widely
In 2021, various countries implemented different approaches to cryptocurrency regulation, ranging from outright bans to more permissive frameworks, reflecting the evolving landscape of this asset class.
2021: Kazakhstan Becomes Second-Biggest Crypto Mining Country
Kazakhstan emerged as the second-biggest crypto mining country in 2021, producing 18.1% of the global exahash rate, reflecting the global shift in mining activity.
2021: Federation Tower in Moscow: Hub of Cryptocurrency Money Laundering
Reports from Bloomberg and the New York Times in 2021 identified Federation Tower in Moscow City as a significant center for cryptocurrency money laundering activities. Numerous cryptocurrency businesses operating within the complex, including Garantex, Eggchange, and Bitzlato, were suspected of facilitating the laundering of illicit funds obtained through scams, darknet markets, and ransomware. The US government sanctioned Suex, another business located in the tower, in 2021 for its involvement in money laundering. Furthermore, Bitzlato founder Anatoly Legkodymov was arrested on money laundering charges filed by the United States Department of Justice.
2021: UK Financial Regulator Research on Cryptocurrency Awareness
Research by the UK's Financial Conduct Authority (FCA) in 2021 indicated that warnings about cryptocurrency risks were largely ignored. The study found that less than 10% of potential buyers were aware of consumer warnings, and a majority of young investors were driven by social media and competition rather than a thorough understanding of the risks.
2021: Cryptocurrency Market Reaches $2 Trillion
The total value of all cryptocurrencies reached $2 trillion at the end of 2021, marking a significant milestone in market growth.
January 2022: IMF's Call for Coordinated Cryptocurrency Regulation
In January 2022, Tobias Adrian of the IMF emphasized the need for a coordinated, consistent, and comprehensive approach to supervising cryptocurrencies. He highlighted the importance of starting global regulation efforts to maintain financial stability while benefiting from technological innovations.
February 2022: DOJ Establishes National Cryptocurrency Enforcement Team
In February 2022, the US Department of Justice appointed Eun Young Choi to lead a new team focused on combating cryptocurrency-related crime.
March 2022: Biden Issues Executive Order on Cryptocurrency Regulation
In March 2022, President Biden signed an executive order to promote responsible cryptocurrency development while mitigating risks, reflecting a balanced approach to a rapidly evolving industry.
April 2022: Virgil Griffith Sentenced for Sanctions Evasion
In April 2022, programmer Virgil Griffith was sentenced to five years in prison in the US for attending a cryptocurrency conference in Pyongyang, North Korea. He had given a presentation on blockchain technology, which raised concerns about potential use for sanctions evasion.
May 2022: TerraUSD Collapses
Terra's stablecoin, UST, experienced a significant crash in May 2022, plummeting from $1 to 26 cents and leading to substantial financial losses.
May 2022: Reports of suicidal investors following the collapse of Terra's Luna currency
The May 2022 collapse of Terra's Luna cryptocurrency led to a resurgence of reports highlighting suicidal investors within crypto-related subreddits. This tragic outcome underscores the severe financial and emotional toll that cryptocurrency market volatility can have on individuals.
June 2022: Bill Gates criticizes cryptocurrencies, calls them "100% based on greater fool theory".
In June 2022, business tycoon Bill Gates publicly expressed his skepticism about cryptocurrencies, labeling them as "100% based on greater fool theory." This statement reflects the ongoing debate surrounding the intrinsic value and long-term viability of cryptocurrencies.
September 2022: Ethereum's "The Merge"
Ethereum successfully transitioned from a proof-of-work to a proof-of-stake consensus mechanism in September 2022, an upgrade known as "The Merge." This significantly reduced Ethereum's energy consumption and carbon footprint.
September 2022: Legal Action Against Terraform Labs Founder
South Korean prosecutors sought an Interpol Red Notice for Do Kwon, the founder of Terraform Labs, in September 2022, following the collapse of the TerraUSD stablecoin.
September 2022: US Releases Framework for Responsible Cryptocurrency Development
The US government released a comprehensive framework in September 2022, outlining its approach to supporting innovation and addressing risks within the cryptocurrency sector.
November 2022: FTX Exchange Collapses
FTX Trading Ltd., a major cryptocurrency exchange, filed for bankruptcy in November 2022, sending shockwaves through the industry and raising concerns about investor protection and the need for improved regulation and security in the cryptocurrency ecosystem.
2022: Cryptocurrency Market Fluctuations and Integration
By 2022, the cryptocurrency market experienced fluctuations, with its total value halving from its peak in late 2021. The market's integration with traditional capital markets and sensitivity to factors like inflation forecasts became increasingly apparent.
2022: Cryptocurrency and Sanctions Against Russia
Cryptocurrencies drew significant attention in 2022 when Western nations imposed sanctions on Russia following its invasion of Ukraine. American sources raised concerns that crypto transactions could potentially be used to circumvent these economic sanctions.
2022: Ukraine raises millions in cryptocurrency aid following Russian invasion
Following the 2022 Russian invasion, the Ukrainian government successfully harnessed the power of cryptocurrency to garner international support. By leveraging cryptocurrency donations, they were able to raise over US$10,000,000 in aid.
2022: RenBridge: Facilitating Money Laundering and Links to North Korea
In 2022, investigations revealed that RenBridge, an unregulated platform used to transfer value between blockchains, played a significant role in laundering at least $540 million since 2020. The platform gained popularity among individuals seeking to launder stolen funds, including those associated with a cyberattack on the Japanese crypto exchange Liquid, which was linked to North Korea.
February 2023: Transaction Fees for Ether and Bitcoin
In February 2023, the median transaction fee for Ether was $2.2845, while for Bitcoin it was $0.659, reflecting the different fee structures of these cryptocurrencies.
February 2023: SEC Cracks Down on Kraken's Staking Service
The SEC ruled in February 2023 that Kraken's staking service violated securities laws, resulting in a $30 million settlement and impacting other exchanges offering similar programs.
March 2023: SEC Issues Warning on Unregistered Crypto Asset Securities
The SEC issued an investor alert in March 2023, highlighting the importance of regulatory compliance for firms offering crypto asset securities to protect investors from potential risks.
June 2023: Cryptocurrency Market Size
By June 2023, there were over 25,000 cryptocurrencies available, with more than 40 having a market cap exceeding $1 billion.
November 2, 2023: Sam Bankman-Fried Found Guilty
On November 2, 2023, Sam Bankman-Fried was found guilty on seven counts of fraud related to the collapse of the FTX cryptocurrency exchange. The charges included wire fraud, securities fraud, and campaign finance violations.
2023: Recent Cryptocurrency Market Volatility
From 2021 to 2023, the cryptocurrency market faced another period of volatility, including a bubble and crash.
2023: Hong Kong to Implement Stablecoin Regulations
Hong Kong is developing a regulatory framework for stablecoins, expected to be implemented in 2023/24.
2023: LiteBit Ceases Operations
LiteBit, a cryptocurrency exchange that allowed users to choose transaction fee presets, shut down operations on August 13th, 2023, citing market changes and regulatory pressure.
March 28, 2024: Sam Bankman-Fried Sentenced to 25 Years
On March 28, 2024, Sam Bankman-Fried was sentenced to 25 years in prison following his conviction on multiple counts of fraud related to the FTX cryptocurrency exchange. The sentence reflected the severity of his crimes and their impact on investors and the cryptocurrency market.
April 2024: Cook Islands Proposes Tainted Cryptocurrency Recovery Bill
In April 2024, TVNZ's 1 News reported that the Cook Islands government proposed the Tainted Cryptocurrency Recovery Bill, allowing "recovery agents" to use measures, including hacking, to investigate or find illegally-used cryptocurrency. The bill was criticized as flawed and unconstitutional.
May 2024: US Congress Advances Digital Assets Regulation Bill
In May 2024, the US Congress advanced the Financial Innovation and Technology for the 21st Century Act to the full House of Representatives. This bill aims to provide regulatory clarity for digital assets, defining responsibilities between the CFTC and SEC, and excluding stablecoins from their regulation except for fraud and certain activities.
