At the start of this 12 months, I predicted three main themes in cryptocurrency for 2019: Cryptocurrency could be embraced as “regtech&
At the start of this 12 months, I predicted three main themes in cryptocurrency for 2019: Cryptocurrency could be embraced as “regtech” by monetary establishments and regulators, it will play a significant position in sanctions enforcement, and Anti-Cash Laundering practices (AML) would strengthen in Asia.
Because it seems, 2019 was an necessary 12 months for cryptocurrency by way of laws, however extra by way of readability offered by the Monetary Motion Process Drive (FATF) and FinCEN, than automating banks’ compliance packages and regulatory oversight. Notably, for the primary time, FinCEN explicitly states blockchain evaluation is a vital a part of an efficient AML resolution and a major consider cryptocurrency companies’ capability to adjust to the Financial institution Secrecy Act (BSA). FinCEN makes it clear that Know Your Buyer (KYC) processes are additionally necessary, and cryptocurrency companies ought to count on robust regulatory scrutiny on that as nicely subsequent 12 months.
We additionally noticed additional regulatory readability from the SEC. For instance, the Blockstack Reg A approval was the primary approval of its type and demonstrates a path to SEC-approved IPO-type fundraising with a crypto token. Whereas different companies have beforehand taken benefit of Regulation A , that is the primary time that buyers will obtain a token slightly than shares within the firm.
Now that now we have the regulatory readability, I feel 2020 might be an necessary 12 months for embracing cryptocurrency as regtech.
Cryptocurrency did certainly proceed to change into necessary to sanctions enforcement, most notably associated to fentanyl trafficking. I count on this development to proceed.
Whereas our enterprise expanded in Asia and Anti-Cash Laundering practices there are strengthening, we nonetheless see the laundering of enormous quantities of illicit funds via some OTC brokers working out of China. Funds stolen via the PlusToken rip-off is an efficient instance of this.
One notable milestone that I did not predict was main regulation enforcement bulletins that credit score blockchain evaluation as a essential device in figuring out suspects and making arrests. The Division of Justice’s announcement of the takedown of Welcome to Video, the most important ever youngster pornography web site by quantity of fabric saved, together with the arrest of its proprietor and operator and greater than 337 web site customers throughout 38 international locations together with the identification and rescue of 23 minors, was a significant occasion for the business. Legislation enforcement mentioned how they had been in a position to harness blockchain evaluation to make arrests and rescues that in any other case wouldn’t have been potential. This was an necessary instance of how blockchains can really present better transparency into monetary transactions, not much less.
2019 additionally noticed the doorway of main gamers into the cryptocurrency ecosystem, significantly Fb and Constancy. With Libra, Fb has the chance to make cryptocurrency out there to their large person base, resulting in its extra pervasive use. After all, this has the potential to create monetary inclusion for each good and dangerous actors, and the chance of cash laundering will have to be mitigated. Transaction monitoring might be wanted to satisfy the expectations of regulators around the globe. And Constancy’s launch into custody and buying and selling providers for digital property can be a boon for the business and can pave the best way for additional adoption from monetary establishments.
Lastly, CME Bitcoin futures was an thrilling improvement and I count on it to proceed to choose up.