THE IMPACT OF CRYPTOCURRENCIES ON THE FINANCIAL SYSTEM AND POTENTIAL CONSEQUENCES FOR FINANCIAL AND ECONOMIC SECURITY

Abstract

The issue's relevance regarding using cryptocurrencies for criminal purposes is exceptionally high in the context of modern digital technological advancements. Given that cryptocurrencies are anonymous and decentralised, their use in illicit transactions poses a significant threat to a country's financial system and economic security. The widespread adoption of cryptocurrencies presents new challenges for regulators, which necessitates effective mechanisms for controlling and ensuring financial operations' transparency. In particular, it is well known that cryptocurrencies are actively used in fraudulent schemes, cybercrime, and terrorism financing, thus increasing risks to national economies and the stability of financial systems. This study aims to analyse the risks associated with using cryptocurrencies for criminal purposes and evaluate existing approaches to regulating their circulation to ensure financial and economic security. Specifically, the research focuses on determining the volume and types of illicit cryptocurrency transactions and examining the effectiveness of various cryptocurrency regulatory mechanisms in minimising risks to financial and economic security. The research methods include analysing statistical data, particularly statistics on illicit cryptocurrency operations, and reviewing scientific publications. The analysis of scientific publications helps assess the challenges regulators face and the prospects for preventing financial risks related to cryptocurrencies. The study's results show that although cryptocurrencies are indeed used for illegal purposes, their share in the total volume of transactions remains low. However, serious threats to financial and economic security exist, particularly in the context of cybercrime and money laundering. As a result, recommendations were made to strengthen cryptocurrency regulation, specifically through improving financial monitoring mechanisms and enhanced cooperation between international regulators to ensure the stability of economic systems. This research is significant for developing policies and strategies for cryptocurrency regulation and for scientific studies examining the impact of emerging technologies on economic security.