As the crypto industry matures, regulations around the world are catching up with it, and these threaten to change the status quo.
The EU and Europe as a whole have been especially forthcoming with crypto regulations, even as powerhouses within the continent are pursuing status as crypto hubs.
One such development is the Anti-Money Laundering Regulations, which was just passed by the EU. These regulations impose stricter measures on financial institutions when it comes to Know-Your-Customer (KYC) requirements.
They are especially relevant because Crypto Asset Service Providers (CASPs) are included in the regulations.
What These Regulations Mean
As per these new regulations, firms that they apply to will have to collect and verify the identities of all of their customers. This is rather interesting as one of the biggest draws of crypto is being able to use it while protecting privacy as much as possible.
This is still done with many crypto-focused platforms like decentralized exchanges. And, many of the best crypto casino sites operate without know your customer checks. Over the years, demand for the anonymous casino has not waned and we don’t expect it to now.
As these regulations are put into place, it will be interesting to see how crypto-focused institutions respond and which will be unaffected. Another requirement is that information relating to cross-border transactions be stored.
Crypto is widely used for cross-border payments as they tend to be cheaper and faster than traditional methods. Tokens like XRP have especially become popular for this reason but these regulations are looking to curb the use of crypto for illegal activities.
One of the long-running concerns about the crypto sector is that these digital assets will be used to fund crime.
As crypto becomes even more mainstream, and countries like the UK seek to become global crypto hubs, these concerns haven’t stopped and incoming laws are looking to both protect the public and reduce instances of crime.
This is why, along with these regulations, firms that are governed by this law are required to report any suspicious activities to the authorities.
The (Regulatory) Price of Progress
Anyone who has seen the trajectory of the crypto industry from the early 2010s to now will tell you that it has come a long way. For years, cryptos were underground assets that the mainstream didn’t take seriously.
Now, Bitcoin is legal tender in at least one country, and a spot Bitcoin ETF was approved earlier this year. While we celebrate all of this progress, the heightened profile of Bitcoin and other cryptos means that they are subject to harsher regulations.
Regulators like that of the spot Bitcoin ETF could afford to ignore them when they were hardly used assets, but now, the stakes are higher. It seems that with the success of the industry inevitably comes more scrutiny.
But despite these new laws, crypto users have and will continue to use crypto anonymously in some capacities. Those who use the firms that are regulated under these laws, however, can expect more protection both from the firms and from regulators.