Crypto Exchanges: Slow Shift to Classic Financial Industry Regulations?

2021-1-26 12:14

Ever since Bitcoin saw the dawn of the day in 2008, the crypto industry has come a long way. Over a decade later, there are hundreds of different cryptocurrencies available in the market and numerous exchanges and trading platforms spread across geographies and time zones. While the industry has come a long way, thanks to increased adoption there are still concerns surrounding the legitimacy of various platforms and projects and a lot of people continue to look at cryptocurrencies suspiciously.

These suspicions are rightly placed, and the main reason for that is the lack of accountability on the part of platforms dealing with cryptocurrencies due to the absence of regulations governing it. The lack of a clear regulatory framework and enforcement not only encourages the operation of fraudulent platforms but exposes the crypto sector to far serious issues like money laundering and financing of illicit as well as dangerous activities. When comes to light, it ends up causing more harm to genuine crypto users due to clampdowns and other restrictive actions of governments.

In recent days, there have been numerous reports of investigations and arrests in the crypto industry mainly due to violation of AML legislation. These violations are rampant in the industry as a recent CipherTrace report states that over 56% of crypto exchanges don’t satisfy AML and KYC requirements. Combining non-compliance with the fact that over 70% of Bitcoin transactions were cross-border transactions and a significant portion of criminal funds continue to pour into these exchange platforms makes a good case for the need for crypto regulations that are akin to those followed by traditional banking and financial institutions.

Echoing these revelations, the founder of STEX Vadym Kurylovych says, “Many crypto holders claim that the tightening of regulations in the crypto industry destroys the whole idea of the industry: fast, secure, anonymous money transfers without banks or state borders. But it is not about destroying the primary cryptocurrency idea. It is about the industry maturing. Bitcoin is rising in price, other cryptocurrencies as well. DeFi is a hot topic now. This attracts more and more people to the industry, making cryptocurrency turnover bigger from year to year. That is why the governments and regulatory bodies need to find ways to stop money laundering and illegal activities that may occur if the exchanges will not follow KYC/AML. The loud arrests and investigations against the prominent market players prevent other smaller projects from operating without KYC and AML, give the bad example, and encourage new startups to comply with financial industry rules. Although, it might not be 100% since digital assets are not regulated in every jurisdiction.”

While regulations are welcome in the crypto sector, the governments and regulatory bodies should attempt to strike a balance between control and ease-of-use, as well as ease of doing a crypto business to create a thriving financial ecosystem. For the most part, many crypto players choose to be non-compliant to avoid the costs and sometimes even the bureaucratic hurdles that accompany the licensing process under some of the current regulations.  However, that shouldn’t be the justification for non-compliance as getting caught doing so can have serious repercussions. In fact, crypto exchanges should proactively ensure compliance and acquire the required licenses even if that means additional expenses to address issues related to money laundering, terrorist financing, and other illegal activities for the greater good.

In Kurylovych’s words, “It is easier to be non-compliant, of course. You do not lose new users because of the complicated onboarding process. You do not have to pay the compliance team and obtain the expensive licenses. However, that is not right if you do not know who your users are and if they are trading to earn money to finance some horrible illegal activities, like terrorism. You can also be the subject of the penalties from different regulatory bodies if you accept the funds from other nationals, not only from the countries where you are licensed. For example, you can have a serious penalty if you are operating in Europe, transfer money, or accepting payments but not compliant with The Anti-Money Laundering Directives.

For instance, STEX is licensed in Estonia, and we are compliant with the EU cryptocurrency regulations. Estonian jurisdiction is one the most progressive in Europe regarding cryptocurrencies”

Weighing the pros and cons, it is evident that regulations are necessary for the crypto industry to prevent criminal activities and also to ensure the safety and security of the users’ investments. And currently, some countries have regulations that are more favorable to the industry compared to others. In order to bring uniformity, it is time for the governments to put their heads together and frame crypto-industry friendly regulations so that the crypto exchanges and services providers across the world can operate legitimately, in compliance with the legal frameworks of respective nations, just like traditional financial institutions.

 

Image by PIRO4D from Pixabay

Similar to Notcoin - Blum - Airdrops In 2024

origin »

Vice Industry Token (VIT) на Currencies.ru

$ 9.59E-5 (+0.36%)
Объем 24H $8
Изменеия 24h: 0.01 %, 7d: -71.49 %
Cегодня L: $9.59E-5 - H: $9.59E-5
Капитализация $276.56k Rank 99999
Доступно / Всего 2.884b VIT

industry come crypto long way exchanges numerous

industry come → Результатов: 126


Фото:

Japan’s SBI Holdings to launch crypto-based CFDs

Japan’s financial giant, SBI Holdings, has recently announced the soon launch of crypto-backed CFDs. With the crypto prices growing, the industry is attracting more attention than ever. Meanwhile, new developments are making those who come for the prices to stay for convenience and efficiency, so adding derivatives contracts for crypto could attract new customers for the company.

2020-8-29 14:35


Фото:

Cardano Has The Best Code Quality In The Crypto Industry, Charles Hoskinson Asserts

Cardano has been touted as one of the most ambitious blockchains and crypto projects in the industry, and many characters have come forward to pout out that fact. The latest event involved one twitter user by the handle name “red pin” who applauded Cardano (ADA) for its steadfast energy in fostering the development of the […]

2020-4-22 23:08


Фото:

Top Pharmaceutical Firms Urge FDA to Adopt Blockchain for Drug Tracking

Leading market participants in the United States pharmaceutical industry, logistics firms, distributors and other stakeholders in the pharma supply chain have come together to publish a report buttressing the need for industry players to adopt blockchain for tracking prescription drugs, following the successful completion of a DLT pilot project with the Food and Drug AdministrationRead MoreRead More.

2020-2-26 16:00


Nearly 70% Of BCH Hashrate is Controlled by Unknown Mining Pools, Is A 51% Attack At Risk?

BTC.top formerly controlled 15% of the hashrate, which has dwindled to almost nothing. No information has come from Bitcoin Cash on how this user gained such substantial control. [/beg-green-box-list] One of the biggest threats to the cryptocurrency industry is that of a 51% attack, which is the possibility that holding over half of the control […]

2019-12-30 21:13


Are Institutional Investors Still Interested In Cryptocurrencies: 2019 Report

Over the course of the year, institutional investment has increased at a fast pace following the rapid development in the industry and exponential growth in Bitcoin over the last 12 months. CEO of digital asset manager Vision Hill Group, Scott Army, released the ten most important things that institutional investors should be looking for come […]

2019-12-23 22:35


PrimeXBT: Here’s what you need to know about the popular trading platform

Over the past year, the crypto industry has watched the meteoric rise of PrimeXBT, a margin trading platform that allows users to trade a variety of different markets using up to 1000x leverage. PrimeXBT’s ascent to the top of the crypto margin trading game has come about as other competing platforms – like BitMEX and […] The post PrimeXBT: Here’s what you need to know about the popular trading platform appeared first on CryptoSlate.

2019-12-13 13:00


EU Will Opt Against Issuing Stablecoins, Instead Choosing to Regulate Existing Stablecoins

Stablecoins are one of the most consistent assets of the cryptocurrency industry, and there have already been many countries and companies to come out with their own versions. While the idea of having an asset pegged to an asset is appealing to some, the European Union is notably setting themselves apart. While the EU isn’t […]

2019-11-7 02:52


Bitcoin-Rabid Japan Gleefully Cheers Facebook’s ‘Killer App’ Libra

Facebook’s plans to launch a cryptocurrency are an indication that blockchain technology has come of age and is ready for prime time, especially in Japan. According to the chairperson of the Japan Security Token Association, Go Masuda, Libra is blockchain’s second “killer app,” after Bitcoin: “The industry lacked a good use case of blockchain technology.

2019-10-3 21:18