Crypto assets exist for a single purpose: regulatory arbitrage. Effectively to undermine the rule of law and circumvent controls that nation states have put in place to safeguard the public and protect their economic interests. These include controls like sanctions enforcement, know your customer, anti-money laundering and counter-terrorism financing.
Dark flows of crypto assets outside of the regulatory perimeter undermines these controls by allowing criminals to circumvent the law and engage in illicit financing and avoid law enforcement controls. This undermines the rule of law and the capacity of the state to protect its national interests.
While crypto assets don't pose an existential threat to the state per se, they do enable crime and undermine policy which weakens trust in democratic institutions and threatens the way of life for law-abiding citizens.
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