An Analysis of the Double-Edged Sword Effect of Blockchain Technology on Financial Crime Governance

Ye-Wei Sun （ University of Murcia, Murcia, 30003, Spain ）

Abstract

Blockchain technology, characterized by features such as decentralization, is transforming the financial system and providing new tools for financial crime governance. However, its characteristics like anonymity are also exploited by criminals, giving rise to new types of financial crime. This paper analyzes its "double-edged sword" effect from a financial professional perspective: first, it outlines the technical principles and current applications; then, it explores its empowering mechanisms as a "sharp sword" in anti-money laundering, combating terrorist financing, and enhancing transaction transparency. Subsequently, it analyzes its abuse as a "dark blade" in criminal activities such as cryptocurrency money laundering. Employing the financial regulation "trilemma" framework, the paper argues for the necessity and challenges of seeking a balance between decentralization, privacy protection, and effective regulation. It proposes comprehensive governance pathways, including building an adaptive regulatory framework that synergizes "RegTech" and "Compliance Tech." The research indicates that guiding blockchain technology to serve financial security and stability requires acknowledging and mastering its dual nature.

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