Criminal Regulation
Cryptos, being a global asset, are subject to rules and regulations all over the world. It’s their job to adjust to them, and they did just that with China’s regulation as we discussed yesterday. Although large economies are trying to create regulations for the digital currencies, international crime watchers have their eyes on cryptos too. One of the major downsides is that crypto is used for a lot of criminal activity, whether it’s money laundering or ransom payments.
With the frequency of these incidents rising, groups around the world have acted. The Financial Action Task Force, an international group that coordinates global policy for illegal financial schemes, called for governments to increase regulations on crypto businesses by making them identify their customers and reporting suspicious activity. The group is made of 30 countries including the US, China, and Europe, and they work with these countries to place regulations. The hammer was pressed hard on DeFi especially as the group found that money laundering is most common in that area of the crypto industry. They want to designate owners of DeFi projects to identify and report the users that they are involved with, once again fighting any crime risk. Crypto companies had a lot of negative things to express in response, saying that it doesn’t allow them to innovate further, remove the idea of privacy in the industry, and it simply doesn’t work with how the blockchain is designed. However, it’s important to note that companies like Coinbase and Kraken are already following these rules in the United States, signalling that it might not have that much of an effect. What do you think about this regulation?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
