2021-8-2 12:27 |
Investing in cryptocurrencies is the trend of 2021. Both retail traders and corporations choose to invest in cryptocurrencies as they offer high returns.
For example, Tesla earned more from its $1.2 billion investment in bitcoin than from its core activities in a year.
This factor drives businesses to the cryptocurrency industry. However, before moving funds from a company’s account to digital assets, the “flip side of the coin” should be considered.
Banks are suspicious of transfers to crypto platformsSince the company’s funds are kept in a bank account, the transfer, to buy cryptocurrency, will have to be made from this account.
That’s where businesses may immediately face problems. Banks tend to treat transactions to cryptocurrency trading platforms with caution.
There is a strong belief that cryptocurrencies are used for terrorist financing and fiat money laundering. Therefore, a transaction to a crypto exchange from a legal entity is perceived as dubious.
The bank may decline the transfer and freeze the account until the situation is clarified.
A common solution to this problem is to open a bank account in a crypto-friendly jurisdiction. Banks are more loyal to crypto platforms in some countries, so there will be no problems with the money transfer.
In this case, the company will have to transfer funds first to its account in a foreign bank and then to a crypto exchange. Of course, this way you will have to pay higher fees, which will take a little longer. However, the transaction won’t be declined and the bank account won’t be frozen.
Increased focus on the industryThe cryptocurrency industry attracts attention from both regulators and criminals. The regulatory scrutiny is understandable: they cannot leave a new and developing industry unattended.
The criminals are motivated by exactly the same arguments, so there are plenty of fraudsters in the cryptocurrency industry.
The media is flooded with the news of how scammers have stolen money from unsuspecting victims. They are very creative when it comes to taking money out of other people’s pockets. Below are the most popular types of crypto frauds:
Fake crypto exchanges: Clients are attracted by low trading fees or no fees at all. After a user deposits money to their account, it is gone forever.Cryptocurrency schemes: Ponzi schemes still exist in 2021, and let’s not forget about the risks. The crypto industry is “manna from heaven” for fraudsters. Ponzi schemes are thriving due to a high return on investment in some crypto assets. Investors are told about bumper profits from a simple investment. The scammers often say that the industry is new and the window of opportunity will soon be closed.Fake cryptocurrency giveaways: Fraudsters announce fake giveaways, impersonating celebrities and popular people in social media. They ask to send any number of digital coins to a specified cryptocurrency wallet and promise to send back the doubled amount. Naturally, you’ll get nothing in return. It’s better to stay away these giveaways.These are the most common scams, but the list is not exhaustive. Therefore, an investor should be extremely careful when investing in crypto, as scammers invent new ways of deceiving people every day.
Cryptocurrency legal backgroundEach country has its own legal background in the cryptocurrency industry. A single regulatory standard for digital assets does not exist.
For example, cryptocurrencies cannot be used as a means of payment in Russia, meaning that people won’t be able to buy something with them.
Taxation also varies in countries where cryptocurrency is not prohibited. In Russia, users will have to pay 13% on the investment returns (the difference between the purchase and sale price). In Belarus, cryptocurrency operations are not taxed until 2023.
Chinese authorities try to ban cryptocurrencies and their mining. Instead, they introduce the state-controlled cryptocurrency (CBDC).
Meanwhile, Miami holds a share of its city budget in BTC. Citizens of the state can pay for utilities and goods in stores with bitcoin. Some people even receive their salaries in bitcoins.
It all boils down to the fact that you may face issues while trying to sell it somewhere else having purchased cryptocurrency in one country.
The risk of getting “dirty” cryptocurrencyDirty cryptocurrency is a cryptocurrency that has been used in illegal activities. Although regulators in different countries are concerned about privacy-focused altcoins, the statistics show that bitcoin is a cryptocurrency of choice among criminals.
Regulated crypto platforms keep track of all transactions. They will freeze “dirty cryptocurrency” transferred to their wallets. If its “dirty origin” is confirmed, the owner won’t get it back as the platform will send it to law enforcement authorities.
Investors should be very careful while choosing the platform where they purchase their coins. If the crypto exchange is not regulated, then there is a risk of buying “dirty cryptocurrency”.
Security issueSecure cryptocurrency storage is a very important issue. Digital coins should be stored in cold wallets – those that are not constantly connected to the Internet. Sometimes people purchase separate laptops without an internet connection where they keep their coins. There are also hardware wallets such as the Ledger Nano X.
An important note: Never keep access codes or seed phrases from wallets on PCs or gadgets with an Internet connection. Practice shows that hackers can get access to devices quite easily, and if they find a password from a crypto wallet there, investors can say goodbye to their coins.
Strange as it may sound, paper is considered to be the most reliable way to store passwords and keys. Print or write the required information on paper and keep it away from prying eyes, locked in a safe preferably.
How Currency.com helps businesses invest in cryptocurrencyNow let’s see how crypto exchange Currency.com helps companies solve issues they may face while investing in cryptocurrency:
Currency.com operations are regulated by the Decree of the President of the Republic of Belarus “On the Development of the Digital Economy” and other legislations of the Republic of Belarus. This means that every coin that comes to the platform is carefully checked, so there is no risk of buying “dirty cryptocurrency”.Crypto exchange Currency.com regularly performs security audits to make sure that users funds are safe.There are over 2,000 tokenized assets available on the platform, including tokenized shares, bonds, indices, commodities, ETF and fiat currencies.This article contains market information and should not be considered as investment advice. It is a subjective point of view of the author. Past performance is not indicative of future price movements.
The post Problems for Corporates When Investing in Crypto appeared first on BeInCrypto.
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