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Increasing speculation is that the global economy could be headed for a recession in 2023. This comes as governments around the world continue to grapple with rising debt levels and sluggish economic growth despite massive fiscal stimulus packages. 
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Meanwhile, companies are facing headwinds from changing consumer preferences, technological disruption, and escalating trade tensions. All of these factors have raised concerns about whether the current economic expansion can be sustained over the long term. 
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Below we explore the likelihood of an upcoming economic downturn and guide you through how to protect your savings and investments should you be faced with one. 
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Are we headed for a recession in 2023?

According to economic research conducted by Bloomberg, economists have predicted a 70% chance of a recession next year, up from their 30% prediction in July last year. While not the technical definition, recessions typically take place after two consecutive quarters of negative economic growth, which was seen last year. 
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Despite the interest rates and inflation, consumer demand has deteriorated. After two years of bulked-up hiring, job search activity is now also waning. The stock markets have declined approximately 20% in 2022 with speculations indicating that further drops in 2023 are likely to follow suit.
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While these stats might cause panic, know that recessions are part of the natural economic cycle. In fact, there have been thirteen recessions since World War II, each lasting an average of 10 months, all of which recovered. With the right preparations, an economic downturn can cause minimal damage to your financial goals. 
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How to ride out a recession with minimal damage (hint: emergency fund)

First and foremost, build your emergency savings fund before the recession goes into full effect. This involves saving money to build up three to six months’ worth of expenses that can be used for any unforeseen costs that might pop up over times of economic slowdown. Building an emergency fund is a surefire way to protect your investments and recession-proof your finances.
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On top of this, experts recommend putting off any big purchases, especially luxury items, and creating (and sticking to) a budget. Look for valuable money-saving tips and implement these into your day-to-day life. These tips might help you to save money beyond the economic uncertainty and help you to offset the rising costs of living. Consider creative ways to beat the economy and cut costs.
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How to manage debt in an economic downturn

If you have a steady job, starting today, increase your payments to eradicate your debt. Don’t underestimate the freedom that comes with being debt-free, not only financially but emotionally too. Once you’ve paid this off you will have more room in your balance sheets to navigate the interest rate hike and increased cost of living typically associated with recessions. 
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Should you lose your job, try to minimize your unessential debt repayments and focus on having enough money to cover your four pillars: food, utilities, shelter, and transportation. If you have funds left over, put them in a savings account, particularly if you don’t have your emergency fund set up yet.
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Whatever happens, do not get into more debt, high interest debt will only make a bad situation worse. Consider speaking to a certified financial planner if you are unsure.
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How to recession-proof your savings

Assuming you still have your job, continue to save money and build your cash reserves. Don’t let economic downturns stop you from moving toward your economic goals. Ideally, you have your emergency savings fund set up to buffer any personal losses and cover your living expenses. This allows you to put your usual amount of savings into an interest-yielding account without any concern for “what ifs”. 
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Now is also a great time to review your budget and allocate every cent to a purpose. If there is any extra money left over, incorporate this into your savings or retirement account. If not, revise to see where you can cut spending and fill up your savings jar. 
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How to manage your stock market investments during a recession

The golden rule of managing your investments and maintaining your financial position during a recession is not to sell at a loss. Time and time again we see investors make trades based on fear, and ultimately make terrible losses while peers that left their funds in the stock market account see impressive returns once the economy has returned to normal.
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Remember: losses are only realized once you withdraw the funds from the investment vehicles. Leave them in there, as with every economic cycle in history, it will get better. And if you have the funds, consider investing a little more - stock market prices will be at “discount” lows. 
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Other valuable advice is not to make any sudden changes to your investment strategy, consider investing as a long-term approach. 
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Some long-term investors look to incorporate shares in consumer staples companies into their portfolios as a strategy to overcome market slumps. By investing in funds like the Consumer Staples Select Sector SPDR Fund or the Vanguard's Consumer Staples ETF, the hopes are that the success of these funds will offset the losses from other stocks within the portfolio.
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Avoid FUD and be prepared

Despite whatever economic situation might arise, rest assured that it shall pass. After all, if you are reading this now then you have most likely lived through several recessions before and come out on top. Don't let any worries stop you from being prepared in case of a recession, after all, these tips above on how to recession-proof your finances are your best chance of coming out on top, again. 

Digital currencies are propelling the banking industry into a period of rapid innovation. As digital currencies continue to immerse themselves in the greater financial landscape, businesses incorporating cryptocurrencies are reaping the benefits from the forefront of this new revolution. This article addresses everything a small to mid-size business needs to know about crypto banking and how to leverage this new-age technology. 
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What is crypto banking?

The term "crypto banking" refers to the management of one's crypto assets by a third-party financial institution. Similar to how traditional banks manage services pertaining to fiat currency, a crypto bank would manage all services relating to cryptocurrencies.
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These crypto banking services typically allow users to hold a balance, make payments with a crypto debit card and earn interest on a supported crypto asset through crypto interest accounts, also known as crypto savings accounts. Some platforms might also offer loan services and crypto interest accounts, also known as crypto savings accounts.
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Due to regulatory restrictions imposed on these fintech companies and the crypto market, it is common for these types of institutions within the financial sector to operate in certain jurisdictions like the United Kingdom or the United States of America. This is not uncommon for traditional banks either.
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A crypto bank is not typically a crypto exchange, instead, it is defined as a fintech platform operating in the crypto banking space. Providing services for both fiat currency and digital assets, crypto banks are revolutionizing the financial institution sector.
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What are the benefits of incorporating crypto into your business?

With over 320 million customers around the world shopping with cryptocurrencies, incorporating digital assets into your payment options allows you to tap into this broad group of consumers.
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Additionally, the advantages of crypto payments outweigh fiat transactions in a number of ways, providing a more secure and faster means to send money across borders (or simply next door). These include:
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• More rapid transactions
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• More cost-effective transactions
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• Accessibility
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• Security
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• No chargebacks (all transactions are final)
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• Reduced fraud
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Data suggests that an increasing number of businesses are starting to explore crypto payments, where employees can earn either their full salary or a part of it in digital assets in remuneration for their job. Some remote workers are even maintaining a career solely relying on crypto payments, hence the rise in crypto banks and crypto banking services.
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Crypto banking, payment gateways, and businesses

Through crypto banking services or payment gateways, businesses are able to receive payments in digital assets and instantly convert them into fiat should they wish to do so. It's important to note that these services go beyond the services of that a normal crypto exchange might offer.
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Some crypto service providers will allow businesses to make crypto payments directly from their account, however, until this becomes normalized business owners often chose to convert their digital assets due to concerns over volatility and cash flow. 
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Below we cover the most pressing questions concerning small to medium-sized businesses incorporating crypto assets into their business models and how to effectively use crypto banking services to streamline this. 
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Crypto Banking Services and Small Businesses 

Can small businesses use cryptocurrency?

Whether you’re conducting a few transactions a week or several hundred a day, cryptocurrencies provide an ideal payment solution. With minimal fees and no foreign exchange rates, accepting crypto payments is a cost-effective solution for small businesses, especially ones operating with a global customer base. 
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By engaging in crypto banking services offered by a reputable crypto bank, businesses can manage cryptocurrency with the same ease as a traditional bank account.
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Why do small businesses use crypto?

Small businesses will typically incorporate cryptocurrencies into their payment methods as a cost-effective solution as well as an opportunity to tap into a broader target market. With minimal transaction fees, short processing times, and heightened security, crypto transactions provide a perfect solution for small businesses. By adding crypto payments to their menu, many businesses are gaining an edge over their competition.
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With the innovation that crypto banks are bringing to the forefront, small businesses can bypass the high fees associated with crypto exchanges and instead tap into crypto banking services at a more realistic price point.
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Crypto as a Business Expense 

Can crypto be a business expense?

For any size business, understanding the tax implications of accepting cryptocurrency payments is crucial. While it's important to understand the tax rules in your area, consulting a tax professional will likely be in your best interest. 
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Businesses can also opt to incorporate crypto tracking software or crypto tax software in their business models to ensure that they are compliant. Please consult your tax professional regarding any questions you might have about being taxed on crypto in your country before engaging in any crypto banking or opening a bank account with a crypto bank.
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Can I buy crypto as a business expense?

As each country’s laws on taxing cryptocurrencies differ, it's best to consult a tax professional in your area who can properly advise. While you don't need a degree in tax to manage a business, gaining an education on the implications of the taxation of cryptocurrencies will do you, as a business owner accepting cryptocurrencies, a world of good. Reach out to your crypto bank or look to crypto companies for recommendations.
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Crypto as Business Investment 

Can businesses invest in crypto?

Yes, it has become increasingly common for businesses of all scales to invest in cryptocurrencies. Due to the high returns that Bitcoin and other cryptocurrencies have presented over the years and its strong ability to store value paired with the increasing adoption of digital currencies as payment methods, many businesses have chosen cryptocurrencies as a viable investment option. 
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With the rising popularity of crypto lending, many businesses are using their digital currency investments to generate wealth. Operating in the same way as traditional savings accounts, businesses can store their digital currency in an interest-generating account that provides returns.
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However, before investing in cryptocurrencies we encourage you to conduct thorough research on the topic and decide if it suits your business’s financial goals and business plan. 
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Can my LLC invest in crypto assets?

Limited Liability Companies (LLCs) provide the best of both worlds: access to the liability shield typically associated with corporations and the tax benefits found in partnerships or sole proprietorships. With this being said, it’s best to check on the cryptocurrency laws and tax implications in your area before engaging in any crypto investments. 

Businesses and Crypto Wallets 

Can a business hold a crypto wallet?

Yes, anyone can open a crypto wallet. When looking to incorporate cryptocurrencies or any crypto financial services in your business opening a wallet is a must. Consider what your business intends to do with the cryptocurrencies (i.e. will you be making daily transactions or storing funds long term) and choose an appropriate wallet. 
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Can I set up a crypto wallet for my business?

Any company can set up a business account and crypto wallet with Tap. Tap provides businesses operating within the digital asset sector with dedicated IBANs allowing for access to international payments, settlement and trading services for both stablecoins and cryptocurrencies. Businesses also gain access to dedicated account managers and support. 
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How do I set up a crypto wallet business account?

To set up a crypto wallet business account with Tap, anyone from the company can fill out this form and a dedicated account manager will get back to you in 1 to 2 working days. 
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Paying Employees with Crypto

Can I pay my employees with crypto?

Yes, cryptocurrencies can be used to pay employees’ salaries in most countries. Before going ahead with the process ensure that you have done adequate research about crypto payments in your area and are familiar with the rules and regulations. I.e. some states require employers to pay the minimum wage in USD and the remainder in cryptocurrencies. 
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Crypto and Business Operations

What is a crypto business account?

A crypto business account is an account from which a business can manage its cryptocurrencies. While crypto business accounts might vary from platform to platform, the basis is that the account will allow a business to buy and sell cryptocurrencies and hold a balance. 

Tap’s business account also provides companies with access to trading facilities, a wide range of crypto wallets, the ability to pay external accounts, passive income generation, and a dedicated account manager. 
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How is crypto taxed for business?

Typically, cryptocurrency income is taxed as regular income tax, however, a business must do adequate research on the matter to determine the tax implications of accepting and investing in cryptocurrencies in your country. We always recommend contacting a tax professional that specializes in cryptocurrencies in your region. 
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How do I report crypto as business income?

You will need to find the relevant tax rules in your area to determine how to report crypto as a business income. Countries will typically require a specialized crypto tax form when declaring crypto income. Remember, it is a criminal offense to not declare the appropriate earnings. 
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Should my business start accepting cryptocurrency?

By embracing cryptocurrency as a payment option, you can lower your transaction fees, safeguard yourself from costly chargebacks and broaden your customer base to better suit their inclinations. This will not only help strengthen the security of your business but is also guaranteed to expand its reach in today's market.

Accepting cryptocurrencies might not be appropriate for every business model, so ensure that the payment option fits into your business model. 

How can a business accept crypto payments?

In order to accept cryptocurrencies you will need to provide your wallet details or QR code in your payment options. Installing crypto payments into your online store is seamless and straightforward, simply find the appropriate plug-in or app compatible with your e-commerce platform. If this option isn't accessible, businesses can add the code from their wallet in HTML.

Can I buy crypto with my LLC?

LLCs are legally allowed to own and trade cryptocurrencies in most countries, however, you will need to confirm with the relevant laws in your area. Businesses can open a crypto wallet in the LLC’s name and purchase the funds directly or transfer the funds from a personal wallet. Alternatively, one can open a business account with Tap and gain access to a wide range of crypto services for your business including a dedicated account manager and support. 

Businesses and Crypto Accounts

How do I buy a crypto account for my business?

Setting up a business crypto account can be done in one simple step. Simply complete the form here and a dedicated account manager will get in touch with you within 1-2 working days and personally guide you through the process. You will be required to provide proof of identity and several business documents. While gaining access to a wide range of crypto services there are no fees associated with opening the account. 

Can you open a crypto bank account for a business?

Yes, absolutely. Setting up a business crypto account with Tap is simple and straightforward. All you need to do is fill out this form and a dedicated account manager will get in touch with you to guide you through the process best suited to your business needs. 
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Can I open a crypto account for my business?

Yes, absolutely. Opening a crypto business account with Tap is very simple. All you need to do is fill out the form and you will be contacted by one of our knowledgeable account managers who will help you find the right solution for your company's needs. 

TradFi (traditional finance) is one of the newer terms to emerge from the cryptocurrency space. A combination of the words traditional and finance, TradeFi encompasses centralized institutions like retail, commercial, and investment banks. The term originated to help differentiate these from the decentralized world of cryptocurrencies. 

What is TradFi (traditional finance)?

TradFi refers to the traditional finance institutions and fintech companies operating within the current mainstream financial system. These service providers are heavily centralized and regulated by governments and are primarily brick-and-mortar businesses that have provided banking and financial services for decades. They typically also carry high barriers to entry, and stringent KYC and AML processes.

TradFi includes everything from banks to hedge funds to brokerages. Examples of TradFi platforms include JPMorgan Chase and Goldman Sachs (banks) as well as fintech companies like PayPal, Square, and SoFi. All these platforms execute financial transactions in a centralized and controlled manner.

Benefits of TradFi and the mainstream financial system

Only businesses with the appropriate licenses and accreditations can offer TradFi services. If these TradFi institutions' services falter in any way, customers can file complaints and receive compensation with the backing of regulatory bodies. Additionally, the amount of paperwork makes it difficult for scammers and fraudulent people to get involved, particularly with money laundering.

TradFi also assists the government by monitoring illegal spending and investments in the finance industry. In DeFi, because crypto transactions are anonymous, this is more challenging to do. By working together, TradFi institutions and governments can better achieve their goals.

TradFi has several limitations. The excessive rules and government intervention stifle development and innovation in the sector. It also keeps a significant portion of the population from accessing financial services. 

In the coming years, TradFi institutions, blockchain technology, and cryptocurrencies will hopefully find a way to collaborate to create an advanced financial infrastructure that is accessible to everyone.

TradFi vs DeFi

DeFi, or decentralized finance, is a financial infrastructure that doesn't require central authorities like banks or governments. It uses blockchain technology and smart contracts to verify and authorize transactions in a decentralized, peer-to-peer manner. 

One of the most prominent key differences between the two is that with TradFi services, the money is issued by the bank while decentralized finance platforms use a blockchain protocol to issue the funds to crypto users. Smart contracts then authorize the transaction between the two parties, while TradFi transactions are facilitated by banks. 

Touched on above, DeFi is much more financially inclusive, providing services to anyone who can fulfil the requirements (which typically involve providing collateral). TradFi platforms on the other hand will put the applicants through rigorous checking of financial statements and credit scores. 

You can get started with the crypto assets services offered by DeFi platforms in a few easy steps. TradFi investing has now been opened up to a much wider audience as a result of digitization, however, it still requires intensive KYC (Know Your Customer) and AML (anti-money laundering) documentation.

TradFi vs CeFi

The centralized nature of CeFi (centralized finance) fuses together the best aspects of DeFi and TradFi. This system provides opportunities to investors who wish to use cryptocurrency-based accounts with less of the risk and might include crypto exchange services. These accounts have many benefits, with a strong similarity to traditional savings accounts.

However, the APYs (annual percentage yield) differ significantly from CeFi to TradFi platforms. You can borrow money against your crypto assets on CeFi platforms just like you would with a collateral-backed loan from a bank. This requires little to no documentation, unlike TradFi.

While some government-backed insurances cover TradFi deposits, this is not the case for CeFi deposits, making it a more risky endeavor.

How do TradFi financial institutions fit into the crypto world?

In order to stay afloat and keep up with the times, industries rely on implementing cutting-edge technologies. Today, blockchain technology and digital assets are at the forefront of a financial revolution.

If traditional financial institutions, TradFi platforms, want to maintain their relevance, they will have to eventually adopt cryptocurrencies into their systems, thus bringing them into mainstream use.

Due to traditional finance needing to comply with government regulations, the implementation of digital currencies into their platforms will likely have positive forward momentum for crypto regulation. 

While currently they remain separate, there is plenty of opportunity for traditional finance and crypto platforms across key sectors like lending and insurance to join forces and merge each one's progress thus far in terms of innovation, speed, and accountability. 

Interest is a fundamental concept in the world of finance and economics. At its simplest, interest can be understood as the fee charged for borrowing money, or the amount earned on invested money. Understanding interest is essential for anyone seeking to manage their finances effectively, whether they are borrowing money, investing their savings, or simply trying to make informed decisions about their financial future.

In this article, we will explore the basics of interest, including how it is calculated, the different types of interest, and how to navigate interest in various financial situations. We will also provide real-life examples and valuable tips to help you make informed decisions about your money.

Types of Interest

There are two primary types of interest: landed money interest and earned interest. Landed money interest refers to the interest paid on borrowed money, while earned interest refers to the interest earned on invested money.

Landed Money Interest

Landed money interest, also known as borrowing interest, is the interest paid by a borrower to a lender in exchange for the use of money. This type of interest is charged on a wide range of financial products, including mortgages, car loans, personal loans, and credit cards.

The interest rate on a loan is typically expressed as a percentage of the amount borrowed, and is determined by a variety of factors, including the borrower's credit score, the term of the loan, and the lender's own risk assessment. The interest rate on a loan can have a significant impact on the overall cost of borrowing, with higher interest rates resulting in higher monthly payments and a greater total cost over the life of the loan.

For example, let's say you take out a $10,000 car loan with an interest rate of 5% per year, to be repaid over a five-year term. Over the course of the loan, you will pay a total of $1,322.74 in interest, in addition to the $10,000 principal amount. If the interest rate were increased to 8%, the total cost of the loan would rise to $1,845.87, a difference of over $500.

Earned Interest

Earned interest, also known as investment interest, is the interest earned on invested money. This type of interest is paid to investors by banks, governments, and other financial institutions in exchange for the use of their money.

The interest rate on investments can vary widely depending on the type of investment, the term of the investment, and the risk associated with the investment. For example, savings accounts and certificates of deposit (CDs) typically offer lower interest rates but are considered low-risk investments, while stocks and other securities can offer higher potential returns but are also considered higher risk.

For example, let's say you invest $10,000 in a CD with an interest rate of 2% per year for a five-year term. At the end of the term, you will have earned a total of $1,047.13 in interest, in addition to the $10,000 principal amount. If you had instead invested the same $10,000 in the stock market and earned an average annual return of 8%, your investment would have grown to $14,693.28 over the same five-year period.

Calculating Interest

The calculation of interest depends on a variety of factors, including the amount of the loan or investment, the interest rate, and the length of the loan or investment term. In general, the formula for calculating interest is as follows:
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Interest = Principal x Rate x Time

Where:
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• Principal is the amount borrowed or invested
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• Rate is the interest rate expressed as a decimal
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• Time is the length of the loan or investment term, expressed in years
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For example, let's say you invest $5,000 in a savings account with an interest rate of 2% per year, to be held for three years. Using the formula above, we can calculate the interest earned as follows:
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Interest = $5,000 x 0.02 x 3Interest = $300
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In this case, you would earn $300 in interest over the three-year term, in addition to the $5,000 principal amount.

Tips for Navigating Interest

Navigating interest can be challenging, particularly for those new to the world of finance. Here are some valuable tips to help you make informed decisions about interest in various financial situations:

1. Understand the terms of your loan or investment: Before taking out a loan or investing your money, make sure you understand the terms of the agreement, including the interest rate, term length, and any associated fees or penalties.
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2. Shop around for the best interest rates: When taking out a loan or investing your money, be sure to shop around for the best interest rates. Compare offers from multiple lenders or financial institutions to ensure you are getting the best deal.
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3. Consider the impact of compounding interest: When investing your money, consider the impact of compounding interest. Compounding interest is interest that is earned on both the principal amount and any accumulated interest, resulting in exponential growth over time.
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4. Avoid overexposure: Be careful not to overexpose yourself to any one type of investment or loan. Diversify your portfolio and consider spreading your investments across a range of asset classes to minimize risk.
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5. Take advantage of tax benefits: Some types of interest, such as mortgage interest and student loan interest, may be tax-deductible. Be sure to take advantage of any available tax benefits when borrowing or investing.

Real-Life Examples

Let's look at some real-life examples of interest in action:

1. Car loan: You take out a $20,000 car loan with an interest rate of 4% per year, to be repaid over a five-year term. Over the course of the loan, you will pay a total of $2,164.17 in interest, in addition to the $20,000 principal amount.
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2. Savings account: You deposit $10,000 in a savings account with an interest rate of 1% per year, to be held for three years. Over the three-year term, you will earn a total of $308.18 in interest, in addition to the $10,000 principal amount.
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3. Mortgage: You take out a $300,000 mortgage with an interest rate of 3.5% per year, to be repaid over a 30-year term. Over the course of the mortgage, you will pay a total of $184,968.79 in interest, in addition to the $300,000 principal amount.

In Conclusion:

Interest is a fundamental concept in the world of finance and economics, and understanding how it works is essential for anyone seeking to manage their finances effectively.

Whether you are borrowing money, investing your savings, or simply trying to make informed decisions about your financial future, understanding interest can help you make better decisions and maximize your potential returns. By considering the tips and real-life examples presented in this article, you can navigate interest with confidence and make informed decisions about your money.

A common misconception for people outside of the crypto community is that cryptocurrencies are used for illicit and fraudulent activities. While a decade ago, cryptocurrencies were largely associated with the dark web and drug trafficking, these days the modern crypto landscape is much more regulated.

In fact, most countries these days have integrated rules and regulations pertaining to the use of cryptocurrencies, from conducting business with crypto to outlining the tax requirements.

The industry is also required to complete stringent KYC (Know Your Customer), AML (anti-money laundering), and anti-fraud procedures when working with crypto, leaving little to no room for criminal activity or criminal networks involved.

Understanding the intricate world of crypto compliance: avoiding serious and organized crime

Staying compliant with cryptocurrency regulations is vital for all companies in the industry, as failure to do so can result in hefty fines and loss of business. Established businesses take KYC/KYB/AML processes very seriously in order to protect their reputation and minimize risk.

Leading market players are not the only ones that must adhere to these tight regulations. Every platform that enables crypto transactions in most crypto-friendly nations is required to follow such protocols. These entail thorough KYC/AML procedures and establishing the identity of its clients.

The company is required to comply with local requirements if it wants to operate legally. Another reason why using a regulated platform to manage your cryptocurrency is always the best option.

At the same time, B2B clients have entirely different expectations. KYB serves to evaluate every potential partner thoroughly, working out many details and investigating the company's directors.

A few compliance tips for businesses:

• Ensure your staff and partners have a basic understanding of crypto security measures.
• Make sure your policies are always up to date and submitted on time.
• Ensure monitoring procedures are up to date and operating optimally.
• Review your past progress and adapt your plans as needed. 

Crypto vs fiat currency: law enforcement investigations

According to a study, less than 1% of illicit funds used in financial crimes in 2019 were carried out using digital assets (even less in 2020). Considering how cryptocurrency operates, this number may surprise you. What's more surprising is that most of these crimes were related to scams; less than money laundering, drug trafficking, terrorist financing, and any other major major criminal use of cryptocurrency.

Money laundering statistics currently attribute $1.6 billion worth of cryptocurrencies being involved in financial crimes, compared to the estimated $1.6 trillion laundered through cash annually.

Responsible crypto enterprises and crypto financial institutions are frequently eager to cooperate with authorities and aid in the fight against financial crimes and criminal activity. Tether's chief technological officer was quick to respond when a token swap platform was hacked, immediately taking action on a $33 million USDT transaction related to the incident. A few weeks later, the assets' owners were reimbursed.

Blockchain surveillance firms, such as Chainalysis and Elliptic, employ specialized software for the following purposes. They collaborate with it to gather blockchain data and examine it for possible illegal behavior. This plays a vital role in helping law enforcement trace digital currency transactions related to the Dark Web and stop illicit funds flowing straight into the wrong hands.

Does crypto hinder law enforcement investigations?

Contrary to popular belief, cryptocurrency transactions are not anonymous. In fact, many cybercriminals have been caught because their identities were eventually traced. For example, the Justice Department was able to track down 63.7 BTC paid by Colonial Pipeline Company to hackers after its computer systems were disabled and caused fuel shortages and a gas price surge across the East Coast. This criminal use of cryptocurrency was quickly investigated and prosecuted.

As blockchain technology uses cryptography to secure its transactions, there is another misconception, and that is that crypto transactions are anonymous, when in reality they are pseudonymous. This means that all transactions on the blockchain are visible, however, they are not tied to identities. So, should you know someone's wallet address you can see their transaction history. This provides law enforcement access to transaction history and the chance to conduct on-chain forensics.

The good news is that law enforcement is getting better at tracking down illicit funds each year. And the cryptocurrency sector is only eager to assist.

Final Thoughts

The recent rapid growth of global regulations has helped foster the growth of the cryptocurrency industry. Digital currencies are actually traceable and don't account for a large majority of financial crimes, despite what many people believe.

Responsible crypto platforms take measures to prevent illegal activities, protect users from fraud and other risks, and encourage them to stay financially responsible. This includes cooperating with law enforcement, as well as offering training and rewards to users.

While cryptocurrencies have played a small role in being used to fund illicit activities, it pales in comparison to the large number of fiat currencies used annually in fraudulent and illegal activities. That's not to say you should stop using fiat currencies, and the same applies for crypto.

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So you decided to go deeper into the fundamentals of investing and learn what an APY is. You've come to the right place, let's get you started with this perplexing "APY" term.

What Is APY?

In conventional finance, a savings account frequently offers both a low-interest rate and an annual percentage yield (APY). Let's look at what they are and what they mean.

• The Annual Percentage Yield (APY) is the annual return from the principal and accumulated interest on investments or savings, expressed as a percentage.
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• The simple interest rate is the amount earned on the original deposit. 

Assume an account at a bank offers a yearly interest rate of 5%. If someone deposits €2,000 into the account, it will be worth €2,100 after a year with the 5% yearly interest rate.                                           

The Difference Between Interest Rate, APY and APR

The APY takes into account the impact of compounding, whereas the interest rate does not. The APY is the projected rate of return earned annually on a deposit after taking compound interest into account.

Compounding interest is the interest that a person accrues from their initial deposit, as well as the interest they earn from their original investment (or in other words, the initial deposit amount plus the interest generated).

The terms APY and APR are frequently used interchangeably, although they represent two different things. These words are sometimes confused due to their close resemblance. However, APY and APR aren't the same things.

The APR (annual percentage rate) is a formula that determines how much interest you'll pay when borrowing money and is the rate of return earned if your funds are invested in an interest-bearing account. 

When a person takes out a loan, their lender sets an APR that varies based on the loan. APRs are either fixed or fluctuating depending on the type of loan the user requires. However, the APR is a rather basic interest rate and does not take compounding into account, unlike APY. 

How Is APY Calculated?

APY represents your rate of return, also known as the amount of earnings or profit you can make. Of course, your ultimate earnings will vary depending on how long you keep your assets invested while the holding period will influence how much you will earn. 

APY measures the rate of the annual return earned on any amount of money or investment after taking into account compounding interest.

The following is the formula for calculating APY:

APY = (1 + p/n)ⁿ − 1

Where:

p = periodic rate of return (or annual APR)

n = number of compounding periods each year
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Bear in mind that an APY can be calculated in a variety of ways depending on the provider.