Compliance and cryptocurrency

The challenging compliance demands that will transform the market

Since 2009, Bitcoin and the blockchain technology it’s built on has turned the cyber world into a digital frenzy. People’s attentions really peaked when the value of one Bitcoin (BTC) went up to almost $20,000 in December 2017. Since then, there has been a lot of speculation about price predictions and on how the cryptocurrency market will evolve.

Whereas not too long ago financial institutions, governments and businesses did not take cryptocurrencies seriously, these days the digital currencies and the technology they rely on is becoming evermore popular, and institutions are now looking to regulate and control the wild world of cryptocurrency. The increasing compliance demands associated with cryptocurrency trading and blockchain technology means we all have to prepare for the changes that lie ahead.

Blockchain regulations and compliance are inevitable

With more and more major retailers accepting cryptocurrencies like Bitcoin, it looks like cryptocurrencies will become more popular and therefore more regulated. Blockchain technology is not only about cryptocurrencies. The same technology is used for smart contracts, cloud storage, supply-chain communications, proof-of-provenance and within many other systems. Naturally, something so comprehensive and all-encompassing needs to be compliant with laws and regulations to ensure a safe and sustainable ecosystem.

Countries and corporations are opening up to the idea of cryptocurrency

Countries like China and South Korea, as well as multinational corporations like Google and Facebook, were all eager to ban cryptocurrencies and actions related to the advertising of cryptocurrencies. However, it now looks like they are taking a more lenient approach, allowing regulated actions subject to good old terms and conditions.

Nonetheless, the fact that Google reversed its cryptocurrency ad ban in the US and Japan shows exactly how world-leading companies are adapting to the growing demand for cryptocurrencies. Google’s ban earlier this year caused Bitcoin (BTC) to drop down over 10%, demonstrating how vulnerable cryptocurrencies actually are to the actions of other parties. Hence, we can expect cryptocurrency values to increase as more and more governments and large companies decide to welcome compliant cryptocurrency matters.

Compliance and regulation comes at a price

Governments currently have no real control over cryptocurrency trading, but as digital assets worth billions continue to roam the cybersphere, institutions are bound to get involved. Government interference will bring forward more security and credibility to cryptocurrency trading (yes, there still are some sceptics) but it will also (most probably) put an end to privacy as well as tax-free trading. This may result in some people opting out of trading, yet not enough to end the global demand for new technology solutions.

For many, the lawless environment of cryptocurrency is exactly what makes it so attractive. Others specifically avoid cryptocurrency due to the lack of regulations and security. It’s definitely a two-way street, receiving universal acceptance in exchange for restricted freedom. Furthermore, with financial institutions such as Goldman Sachs and Morgan Stanley starting to take cryptocurrency more seriously, it’s safe to say that crypto is here to stay.

Traders can expect better blockchain tools in the future

More advanced tools and trading platforms will be developed to keep up with the changing regulations and compliance issues. This will mean safer and quicker trading, as well as improved technology. However, with these increasing compliance measures, traders can also expect more attention from financial authorities conducting forensic investigations into suspicious trading, market manipulation, money laundering and criminal activity.

You have to be compliant if you want to stay in the game

The digital gold rush is happening right now! And yes, we all have to future-proof our trading setups if we want to keep dealing with cryptocurrencies. Software tools, exchanges, trading companies, they all have to submit to the compliance regulations that are coming in the near future. Ultimately, government bodies will eventually force compliance measures upon cryptocurrency exchanges and other service providers in the industry, which creates a dire need for effective and acceptable tools such as Parsiq, designed for blockchain monitoring and analytics.

Cryptocurrency and its regulatory environment is growing every day, and we can definitely expect things to get safer, more controlled and institution-friendly. However, this double-edged sword will provide opportunities and limitations for all parties involved. Nevertheless, traders, governments and companies will need to stay up-to-date and connected if they want to maximise on blockchain technology and cryptocurrency trading. A question that yet remains unanswered is who will lobby the rules of the game — the blockchain community or government bodies?

Stay tuned and you’ll soon find out.

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