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Clear regulations on crypto will boost trust and set the entire financial industry on a solid path

Trust is the key

Until just a few years ago, humanity’s greatest challenge was to ensure that everyone had equal access to the world’s opportunities. The Fourth Industrial Revolution has primarily addressed this challenge, as most of the world’s population potentially has access to global opportunities.

Given this fact, the biggest global challenge today is not that people and companies have access to international opportunities, but that they follow the same rules to access them.

Such a perspective would create healthy competitive conditions and consequently balanced growth that would benefit both developed and developed economies. Rules and regulations benefit the global economy, countries, companies and products offered, including innovative products and services.

No product, no matter how innovative, can survive in business and markets if it does not follow the rules and regulations dictated by strong institutions that have already won the trust of people and markets. Trust is the key.

It is often said that trust is earned slowly and hard, while it is lost quickly. That’s true, but it’s only half the truth. Indeed, trust is lost quickly and only builds slowly and difficultly when rules and regulations are not followed.

The crypto market is looking for ways to be regulated

See what’s happening in cryptocurrencies. For a long time, most players in this industry were opposed to adding controls from a regulatory framework. But trust was immediately shaken after the scams the industry was subjected to. Therefore, with the aim of regaining trust, crypto platforms are now looking for ways to regulate the crypto market in order to set the stage to prevent massive fraud.

The fact is scammers have stolen billions from thousands of people in crypto scams. Given that crypto platforms have become the cybercrime community’s favorite haunt in recent years, crypto platforms need to be regulated to survive.

Additionally, the characteristics of the decentralized blockchain platform on which cryptocurrencies are based provide the environment for money laundering and cybercriminal activities. Cryptocurrencies being laundered through decentralized finance (DeFi) protocols number in the hundreds of millions. This means that cryptocurrencies will benefit prematurely from regulation given the criminal activity in crypto and cyberspace.

As said before, financial products and markets are ultimately about trust. Clear regulations in the crypto market will be a development that will boost confidence in a way that will put the industry on a solid path.

Today, most regulators around the world are busy working on crypto regulations and rules, while the crypto industry is pushing for clear regulations as it sees regulations as the development that could take the industry to a new, improved level.

How the regulatory framework applies to cryptos

The current global outlook for crypto regulation is dynamic and evolving. The UK and US are actively developing regulations to control cryptocurrencies.

Verifying people’s identities and ensuring controls are in place to prevent money laundering and other fraud are critical to building trust. Trust, which is a prerequisite for the proper functioning of financial products, services and markets, including cryptocurrencies. The crypto industry is aware that many of the regulations are necessary to revolve around AML and KYC customer identification processes and as such the crypto industry strongly supports these processes.

The new rules and regulations will result in an increase in cryptocurrency industry infrastructure globally, while all industry participants must learn to comply with AML and KYC procedures. When it comes to KYC, robust and dynamic identity controls are required, which can help ensure traceability of money laundering and other criminal activities. Identity checks should include sanctions checks for high-risk and politically exposed persons. Because they are dynamic, the sanctions list must be constantly updated.

Behavioral analysis for individuals involved in the crypto market is a critical area that all auditors, compliance officers and institutions should focus on in order to demonstrate compliance. With this in mind, the use of artificial intelligence (AI)-based methods offers a comparative advantage in providing reports that keep them one step ahead of scammers.

Cryptocurrency is here to stay It is now time to recognize that cryptos are here to stay and therefore to see how institutions, regulations and rules can support cryptocurrencies so that everyone in the cryptocurrency market has the same rules and regulations can play. The lack of control by central banks and authorities over cryptocurrencies, the anonymity associated with cryptocurrency transactions and the volatility of the price are not helping traditional banks and financial institutions as all of this is eroding trust in all financial companies and institutions, both innovative and traditional financial industries .

A robust regulatory framework in the cryptocurrency market will lead to a new environment for the expansion of innovative financial products. It must be clear to everyone that the advantages are manifold, not only for the new innovative products, but also for the traditional financial companies and institutions. With the regulation of these products, they can include them in their activities and thus create a new development perspective for the entire financial sector.

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