With so many different kinds of regulations enforced in the crypto, KYC, AML and other market, let's dive into what's to come, what could be the change, and ultimately, is it good or bad for Bitcoin and the community?
The cryptocurrency market has been known, in general, for the fact that there is a lack of regulation in certain aspects. Whether or not one regards this as a positive or negative characteristic, the fact is that slowly but surely, market regulators are inserting their views and rules. Mainly the KYC 'Know Your Customer'in Spanish Know your Customer. And the AML 'Anti-money laundering'in Spanish, Anti-Money Laundering.
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Summary of regulations
The United States was one of the first countries to introduce some basic forms of regulations for the cryptocurrency market in 2013. However, digital assets have come a long way since then, implementing numerous changes to their method of operation.
In addition, many cryptocurrency-related startups appeared, and the country is forced to enforce the stricter AML regulations, according to the director of the Financial Crimes Enforcement Network (FinCEN), Kenneth Blanco. He recently said that all cryptocurrency exchanges would have to verify the identities of each customer, part of a process called Know Your Customer (KYC). They must also identify the original parties and beneficiaries of transfers for more than $ 3,000.
The EU is not very far away; in fact, as recently as January 10, the Union introduced an updated version of its fifth Anti-Money Laundering Directive (5AMLD). It includes the KYC process again, but also reads that all transactions will be monitored, and companies will have to file suspicious activity reports (SARs) with the police.
Exchanges and service providers
It affects all cryptocurrency-related businesses that are currently in EU countries. Including some of the biggest exchanges: Binance, Bitstamp, Bibox, Coindeal, and OKEx. The consequences can already be seen, as the Deribit exchange, also based in Europe. He has recently announced that he will be moving from the Netherlands to Panama starting in February this year.
Also, as a result of strict anti-money laundering regulations. The Qatar Financial Center issued a ban on cryptocurrency-related services within the country. It was also applied to other digital assets that can be used as replacements for traditional fiat.
It is also worth noting that Hong Kong is also catching up, publishing KYC rules that are supposed to help with more security by allowing «virtual asset trading platforms to be regulated by the SFC», like Bitcoin for example.
In conclusion
This is where the most significant contradiction comes into play. For the crypto market to receive widespread adoption, it needs regulations and more institutional investors. However, the last two will lead to the loss of anonymity, which has been the backbone of cryptocurrencies for the past few years.
Whether the Bitcoin community likes it or not, KYC and AML regulations are entering the market. Starting from the US and the EU. The trend is likely to continue and absorb most countries, supposedly leading to more security, institutional investors, and widespread adoption. But it could also harm the anonymous nature of the market and the community.
