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- 1 Global efforts are required for comprehensive crypto regulations.
- 2 Crypto businesses should also comply with specific rules.
For comprehensive crypto regulations, companies must comply with specific measures set by the authorities for the greater good. Moreover, this compliance plays a significant role in the cryptocurrency ecosystem for multiple reasons. Globally the regulations and compliance measures are classified into ten basic categories.
Global Crypto Regulations Compliance Measures
Almost every jurisdiction has tried to regulate crypto on the following grounds. Firstly, Anti Money Laundering (AML) & Counter-Terrorism Financing (CTF), which require crypto businesses to identify customers and report suspicious activities. Secondly, they should comply with taxations; crypto being inherently different from traditional finance, governments are calling upon industry experts for suggestions on how to tax crypto.
Crypto exchanges must also be regulated. Last year, the fall of FTX created a complicated situation in the industry. Analysis suggests that the regulatory crackdown on the crypto industry by the Securities and Exchange Commission (SEC) has increased by 183%. Jurisdictions want exchanges to comply with AML and CTF laws.
Some countries try to regulate crypto wallets and want them registered or licensed by concerned authorities. Some jurisdictions also try to regulate crypto mining as well. As Bitcoin mining is a very energy-intensive procedure jurisdictions are trying to control mining to reduce power usage and reduce its environmental impact.
Many governments are also trying to issue guidelines to the crypto business to implement consumer protection measures. They are also required to protect customers’ data and assets. Customer privacy is an essential aspect of the crypto industry, and the authorities should make sure it is maintained.
Along with consumer protection and custodial regulations, some governments are working on the regulatory sandbox—a scenario where crypto businesses could test new products and services in a controlled environment. The regulatory landscape for digital assets is constantly evolving, and investors might soon witness a comprehensive regulatory framework.
The Future of Regulatory Compliance
The crypto industry is believed by many to be in its infancy compared to traditional finance, and its regulatory scenario is even more so. Hence, jurisdictions are making crypto businesses comply with specific regulations.
Bad actors are exploiting the lack of a global authority on crypto. It is common for criminals to execute attacks from countries without an extradition treaty. Or they run to a country without a treaty when they’re identified by the authorities. Also, the industry operates across borders, so there is a pressing need for global crypto regulations.
On May 23, 2023, the International Organization for Securities Commission (IOSCO) released a draft for global crypto regulations which would create a global regulatory framework and help smaller countries incapable of funding their regulation to comply and be safe. Also, it will ensure that the market participants have a level playing field.
Implementing AML and CTF laws would be easier and more effective when the world is involved. However, striking a balance between AML and user privacy is still a puzzle. Regulators worldwide can join forces to solve this problem and have effective AML laws without affecting privacy.
Crypto regulation would require joint efforts from governments and industry experts worldwide. Both parties must be heard for a comprehensive statute to benefit the crypto industry, its users, investors, and the governing authorities.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
