“Sanctions, Ransomware, and Money Laundering on the Bitcoin blockchain”

Andrew Urquhart

University of Birmingham

Abstract: Bitcoin’s pseudonym privacy seen as one of the benefits, however given the permissionless type blockchain that Bitcoin is on, anyone can view transactions and flows.  In this paper, we study the transactions and flows of Bitcoin by governmental sanctioned entities.  We find that sanctioned entities seem to cluster their flows around a few exchanges, but regulation reduces their flows when introduced in countries with higher legal system quality.  However, this regulatory impact is limited in countries with lower legal system quality indicating the need for global regulation to combat illegal use of Bitcoin.