These are very interesting times for the cryptocurrency industry as a whole. Some big changes loom ahead which need to be overcome in quick succession. The first change will require virtually all cryptocurrency exchanges to verify all users’ identities if they are sending or receiving over $1,000 in assets.
Anyone who has used a cryptocurrency exchange in this day and age will be familiar with user identity verification procedures. Known as KYC, it is a very common method already employed by nearly all self-respecting cryptocurrency trading platforms around the world. Those who do not utilize this method as of yet will need to implement a KYC screening process in the next few days.
In a new set of regulations issued by the Financial Action Task Force on Money Laundering, all businesses need to verify the identity of their users. This applies to any user sending or receiving over $1,000 worth of assets in one transaction. Not the biggest deal, when considering how there aren’t too many anonymous platforms left.
Whereas most of the exchanges have already implemented this mandatory procedure, things are a bit different in other regards. Companies bridging the gap between traditional finance and digital assets may find themselves in a bit of a pickle. This new guideline can result in slight trading delays, which is never a positive sign for any company or users.
Additionally, there is a firm belief this new rule will increase the costs for making transactions. It remains to be seen if either of these scenarios will come true, but it is crucial to take every possible outcome into account. For small-sized companies, this new change will be most unwelcome, but there is no alternative to full compliance.
Bitcoin enthusiasts will be very familiar with the concept of BitLicense. Similar licenses exist for companies providing access to trading or lending while acting as a custodian of funds. For those companies, the new rule may make life a bit more difficult. In fact, it may result in additional regulatory scrutiny for those companies, simply because they are involved in Bitcoin and alternative markets.
Whether or not additional scrutiny would be a bad thing, is difficult to predict. There seems to be a growing sense of unease where certain service providers are concerned. As such, it will be interesting to see how this pans out in the years to come. Any company not playing by the new rules could lose its money transmitter license, thus there is a lot at stake.
While this new rule is designed to bring positive attention to digital assets, cryptocurrencies, and tokens, the opposite effect can also come true. As every country needs to appoint agencies to ensure local companies are fully compliant, there may be harsh repercussions down the line. It would not be unlikely to see some companies violating the rules multiple times and eventually becoming obsolete.
It all depends on how the new guidelines will be interpreted and implemented by all parties involved. This may very well be a way to further divide the cryptocurrency and financial world, rather than bring them closer together. It is still too early to draw any real conclusions in this regard, at least for now. Putting an end to any perceived anonymity in the cryptocurrency world – other than by using anonymous currencies – should have a positive impact on this maturing industry over time.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.
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