The J5 says cryptocurrency services pose a systemic risk to the financial system \u2013 by drastically misrepresenting what suspicious activity reports actually do.<\/h5>\n\n\n\n
By Joakim Book<\/p>\n\n\n\n If the tax man can\u2019t see it, they’ll call it criminal. <\/p>\n\n\n\n Two February 2026 reports, issued by the J5, a tax crime and anti-money laundering alliance, suggest that cryptocurrency services might harbor countless transactions of tax evasion and criminal activity. The law enforcement advisory reports \u201cOver-The-Counter Cryptocurrency Trading Desks<\/u><\/a>\u201d and \u201cDemystifying Cryptocurrency Payment Processors<\/u><\/a>,\u201d state that the anonymity and reliability provided by cryptocurrency potentially make them a hidden tool for tax evasion and money laundering.<\/p>\n\n\n\n The reports, littered with \u201cmights<\/em>,\u201d \u201cmay<\/em>,\u201d and \u201cpotentially<\/em>,\u201d suggest that transactions at over-the-counter crypto desks and payment processors enabling crypto payments for goods and services in the real economy are somehow threats to the global financial system. Stronger regulations are needed, the reports conclude.<\/p>\n\n\n\n The J5 is a coalition of tax authorities from Australia, Canada, the UK, the Netherlands, and the United States, born out of long-running pressure from the OECD to close the \u201cgaps\u201d in global tax enforcement.<\/p>\n\n\n\n The J5 Alliance report outlines how OTC desks separate financial flows from otherwise quite open centralized exchanges, which \u201cmakes it difficult to ascertain who is using their services.\u201d In other words, an insufficient panopticon. <\/p>\n\n\n\n In the payment space, the sister report claims that \u201ccryptocurrency payment processors pose significant risks and unknown threats to the integrity of the global financial system. The use of cryptocurrency payment processors can allow bad actors to off-ramp illicit funds on a global scale and realize the benefits of their tax evasion, money laundering, and other financial crimes.\u201d<\/p>\n\n\n\n Together, the reports warn that there may<\/em> be gaps in oversight about potential<\/em> tax evasion and money laundering occurring via OTC desks and in regular commerce using crypto. Besides a brief, hopelessly outdated, two-paragraph account of Bitpay and Payza.com, \u201cfound to have processed over $250 million in illicit transactions,\u201d the J5 Alliance reports are all speculative and hypothetical. <\/p>\n\n\n\n As the reports state: <\/p>\n\n\n\n These statements are so vague and all-encompassing that they would apply to any currency over any payment rails. It trivially condenses to saying anyone using a tool for good may also use it for bad. It\u2019s almost trivial to point out that if a system is genuinely faster, cheaper, and more accessible for ordinary, law-abiding users, it will also<\/em> be faster, cheaper, and more accessible for those with illicit intent. Criminals don\u2019t live in a parallel universe without access to convenient tools. <\/p>\n\n\n\n The reports prominently feature statistics on suspicious activity reports (SARs) between 2015\/2016 and 2025, presenting a sharp increase in filings, from a mere 6 reports to 821 reports for OTC desks, and 58 reports to 5,714 reports, respectively.<\/p>\n\n\n\n What the reports omit is that SARs and other Bank Secrecy Act reports in no way indicate<\/em> crime. In fact, the vast, vast majority of reports filed with regulators are of innocent people and innocuous transactions. US financial institutions file upward of 30 million reports<\/u><\/a> on customers every year, and for those efforts, government agencies have fewer than 400 criminal investigations to show for.<\/p>\n\n\n\n Indeed, with a total<\/u><\/a> market cap of $3 trillion at year end of 2025, and an estimated<\/u><\/a> total of $15 billion in value received by illicit addresses, the reports\u2019 claims of a systemic risk to the global financial system do not appear to hold up, making up for a mere 0.5% of all cryptocurrency value per year.<\/p>\n\n\n\n What BSA legislation and financial surveillance result in is suspicion inferred from privacy and from the absence of universal SAR compliance \u2014 even though SARs themselves don\u2019t effectively stop crime, which even the Treasury Secretary now admits. Before Congress last month, Scott Bessent stated<\/u><\/a> that the SARs don\u2019t achieve their stated purpose: \u201cWe find that many of those come in after the horse has left the barn.\u201d<\/p>\n\n\n\n AML researchers on one side, and a banking lobby saddled with paying the compliance costs of some $60 billion a year on the other, have been saying that for years. Counting up the 2024 results from the Bank Secrecy Act haul, Nick Anthony of the Cato Institute<\/u><\/a> showed that the success rate for criminal convictions or legal follow-up across various federal investigations by the IRS, the FBI, or the DHS amounts to fractions of a percent. <\/p>\n\n\n\n At some $160 million<\/u><\/a> per investigation, thus, the Bank Secrecy Act might have created the most widespread vehicle for ineffective financial surveillance \u2013 a Hail Mary surveillance net with so many holes that bad fish of all sizes swim through. At the same time, it saddles the rest of us with annoying rules, debanked<\/u><\/a> accounts, and an overbearing financial surveillance apparatus.<\/p>\n\n\n\n With that all-encompassing surveillance, authorities still<\/em> don\u2019t have much to show for it \u2014 in fact, as Cato Institute reported last year, the US financial intelligence agency FinCEN has continuously deferred on the question whether any statistics on the BSA\u2019s effectiveness for fighting crime even exist. And yet, via reports like these from the J5 Alliance, regulators clamor for even stricter surveillance across more domains. <\/p>\n\n\n\n Trillions of dollars of transactions surveilled, millions of reports filed, resulting in only a few hundred criminal investigations. The problem, apparently, is not that the overbearing system fails but that not everyone is inside it\u2026 yet.<\/p>\n","protected":false},"excerpt":{"rendered":" Basically, they want to eliminate entities that facilitate private exchanges involving cryptocurrencies who don’t report it to the government. This is mainly rich people that might be doing large buying or selling of cryptocurrency so they won’t affect price while remaining private, verses using an exchange where price is impacted and its reported to the […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7],"tags":[],"class_list":["post-15960","post","type-post","status-publish","format-standard","hentry","category-world"],"blocksy_meta":[],"featured_image_src":null,"author_info":{"display_name":"Jason","author_link":"https:\/\/jasonsblog.ddns.net\/index.php\/author\/jturning\/"},"_links":{"self":[{"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/posts\/15960","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/comments?post=15960"}],"version-history":[{"count":3,"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/posts\/15960\/revisions"}],"predecessor-version":[{"id":15971,"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/posts\/15960\/revisions\/15971"}],"wp:attachment":[{"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/media?parent=15960"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/categories?post=15960"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonsblog.ddns.net\/index.php\/wp-json\/wp\/v2\/tags?post=15960"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/jasonsblog.ddns.net\/wp-content\/uploads\/2026\/02\/image-37.png\")
<\/figure>\n\n\n\nCryptocurrency Services Pose a Systemic Risk to the Financial System\u2026 Maybe?<\/strong><\/h2>\n\n\n\n
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Suspicious Activity Reports Do Not Indicate Crime<\/strong><\/h2>\n\n\n\n