Cryptocurrencies and stablecoins are finally emerging as a mainstream market, pushed along faster now by the global impacts of COVID-19. For all the damage the pandemic has done to many industries, one upside is the advancement and expansion use of digital services and online payments.
Bitcoin boom
The price gains of Bitcoin in particular have been phenomenal, approaching 300% throughout the duration of 2020. As a result, interest in decentralized finance (DeFi) has attracted interest from investors and big fintech players. Wall Street veterans such as Stanley Druckenmiller and Paul Tudor Jones are now positive on Bitcoin and Square and PayPal are adding crypto to their product offerings.
But for the crypto industry to continue to grow and prosper, it needs to seriously consider its compliance requirements — like the need to provide identifying information to help comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations.
Stringent compliance required
To truly become a full-fledged powerhouse in the financial system, cryptocurrencies will need to have effective compliance measures in place. Approval from regulators will help provide a route to full legitimacy for the cryptocurrency industry, opening up participation from more institutional and general public participants.
~Novel Serialisation: Heavens Fire~
There has been significant progress by various regulatory bodies on how to oversee different cryptocurrencies and all their permutations, which seem to point to major changes in the space. The problem with cryptocurrencies is there is no one set rule or body to monitor crypto activity globally with each country able to create its own rules. For the short-term, at least, this is something that is going to continue. Indeed, the cryptocurrency space will need to get ready for more stringent rules governing disclosure of who’s who, who owns what, and where they are as it becomes more mainstream.
More to come
As consumers begin to familiarize themselves with cryptocurrencies as an alternative to traditional currency, the underlying technology and digital asset class overall will continue to grow and be used. This will in turn see the sentiment and value around virtual currencies rise with the industry evolving in a self-perpetuating cycle. As we know, cryptocurrencies offer a sense of freedom by virtue of operating on blockchain and currently, there is a lack of central authority, meaning little to no fees.
Steps taken to facilitate compliance with these requirements will help the cryptocurrency industry transition to the new regulatory regime, improve the perception of trust with regulators and customers, enable better cross-border procedures and help develop a thriving industry ecosystem.
By Zac Cohen, COO, Trulioo
