Category Archives: Cryptocurrency

FILE PHOTO: Monex Group Inc CEO Oki Matsumoto speaks during an interview with Reuters at its headquarters in Tokyo, Japan, April 20, 2018. REUTERS/Toru Hanai

TOKYO (Reuters) - Central bank digital currencies will help boost trading of cryptocurrencies by providing a more convenient platform for converting cryptocurrencies into legal tenders, said Oki Matsumoto, head of Japans Monex Group.

Matsumoto, chief executive of the major financial services firm, welcomed the Bank of Japans plan to look into the idea of issuing a central bank digital currency (CBDC), saying it will help Japan move toward a more efficient, digitalised economy.

CBDCs will significantly enhance the interoperability of cryptocurrencies, he told Reuters on Tuesday. It would make the cryptocurrency market more lively.

At present, converting cryptocurrencies into legal tenders is not easy because many smaller cryptocurrency exchange brokers do not hold bank accounts, Matsumoto said.

If CBDCs are issued, they would offer a digital-friendly platform where CBDCs, cryptocurrencies and legal tenders could be converted to one another more smoothly, he added.

The BOJ said last month it would begin experimenting next year on how to operate its own digital currency, joining efforts by other central banks to catch up to rapid private sector innovation.

Monex is an owner of Coincheck, a bitcoin exchange operator based in Tokyo.

Reporting by Takahiko Wada, writing by Leika Kihara; Editing by Ana Nicolaci da Costa

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BOJ digital currency will help boost cryptocurrency trading, says Monex head - Reuters

A report claims that the US Director of National Intelligence (DNI) John Ratcliffe has contacted SEC Chairman Jay Clayton regarding Chinas influence in the crypto market including mining.

According to the Washington Examiner, the DNI is worried that China has too much control when it comes to crypto. Reportedly, a senior intelligence official told the publication the following:

There are serious national security concerns about Chinas control over Bitcoin and Ether The presidents recent executive order made abundantly clear the threat posed by securities investments that finance Communist Chinese military companies. Digital currency controlled by the CCP could certainly fall into that category, but the bottom line is that we cannot allow China to dominate the technologies and innovations that are going to decide who runs the world for decades to come from artificial intelligence to digital currency, and everything in between.

The same report pointed to recent tweets by Ripples General Counsel commenting on Chinas influence in the crypto markets:

The relationship between the Trump administration and China has been fractious at best. In fact, China is frequently criticized by the current President regarding an ongoing trade dispute. Some people anticipate that once the Biden administration moves into power the rhetoric directed at China may be toned down as public officials change policy direction.

While the DNI may have sent a letter to the SEC regarding their concerns pertaining to crypto, expect little action to take place as the current Chairman has already announced his departure from the agency at the end of the year.

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Report States that US Intelligence is Worried About Chinas Involvement in Cryptocurrency - Crowdfund Insider

by Romy Johnson

Carl Runefelt as a famous YouTuber and trader enjoys a massive following on his YouTube channel and Instagram account TheMoonCarl and this shows the significance of the digital mediums in growing cryptocurrency.

It can be said without a shadow of a doubt how the digital platforms and the digital world as a whole have been behind the growth of several business industries. The world of finance and cryptocurrency has also been touched by the digital world and moreover by the social media world, resulting in flourishing cryptocurrency like never before. Even after so many opportunities arising in the crypto and bitcoin world, many entrepreneurs and individuals are still unaware or have half knowledge in the same. This is when social media groups and dedicated YouTube channels on bitcoin and cryptocurrency enter the picture. Making his name phenomenal in the same is Carl Eric Martin Runefelt who as a notable public figure and entrepreneur has been giving in his best to educate people on topics of bitcoin and cryptocurrency and change their mindsets for the better.

Speaking about people still being less knowledgeable about cryptocurrency, Carl Eric Martin says that the way the subject has been presented to people; it doesnt work for many plus it is not something that the high school curriculum teaches. Hence, he too multiplied his knowledge by reading books and watching videos on YouTube.

Ask him what role do social media play here in providing crypto-based education and he replies, Crypto-related information is readily available in the online space and more and more people are leveraging the social media platforms to reach more people for educating them with the most accurate information, just like I do with my YouTube channel, The Moon. Also, some of the best content can be driven from Facebook, Instagram, YouTube, Twitter and even Reddit where one can find useful crypto knowledge.

Crypto-based social media networks have also been gaining great momentum, which has greatly benefited traders and users for getting involved in their networks. It is also seen as a potential solution to the fake news phenomenon, creating a universally acceptable Fake News Registry, making use of the transparency factors of the technology to assess whether they are compliant to the standards of truth.

With the growth in the spread of insights and knowledge on bitcoins and cryptocurrency, Carl Eric Martin believes that cryptocurrency is already going through a normalized process and becoming acceptable in major parts of the world, making people and industries realize how relevant they are going to get in the coming future.

Carl Eric Martin as a YouTuber exudes his passion for bitcoin and his knowledge in the same have earned him 140K subscribers on his YouTube channel with 1 million views per month on his videos. This goes to show the power of social media platforms in flourishing cryptocurrency to much greater heights.

Carl Eric Martin Runefelt is featured on Popular Press & Media such as Forbes Magazine, CNBC, Tech Times, Coin Telegraph, Toshi Times, Tech Telegraph UK, Bitcoin.pl, Crypto Potato, Bitcoin Insider, Daily Hunt, Benzinga, Hackernoon, Business Insider and many others.

Follow Carl Runefelt on Instagram @TheMoonCarl

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Carl Runefelt Says That Cryptocurrency Is Flourishing Through Social Media - SF Weekly

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Its been a long time coming, but it looks like the sheriff has finally arrived to the Wild West that is the crypto market.

Proposed regulations mean crypto exchanges and other intermediaries will have to be licensed by the Financial Sector Conduct Authority (FSCA). A draft declaration published on 20 November 2020 defines a crypto asset as a financial product under the Financial Advisory and Intermediary Services Act. What does this mean? For one thing, potential investors will have to be advised of the risks of investing in crypto assets like bitcoin. It also means proper risk assessments will have to be applied before onboarding new customers.

Read:Crypto intermediaries must now be licensed FSPs

Moneyweb will be hosting a special webinar to discuss the implications of these proposed regulations on Thursday, November 26 2020 at 11am. Joining us to discuss this will be Brandon Topham of the FSCA, Farzam Ehsani, co-founder of crypto exchange VALR, and Sean Sanders of crypto investment platform Revix.

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Panelists:

Brandon Topham

Divisional Executive Investigations & Enforcement at Financial Sector Conduct Authority (FSCA)

He is an accomplished business executive with considerable local and international experience in corporate governance, finance and commercial law. He has served as a member of the South African parliament, contributing to various committees. He brings a wealth of experience as a forensic accountant to lead the Investigations and Enforcement Division of the FSCA. Mr Topham is a qualified Chartered Accountant CA(SA) and an admitted attorney of the High Court. He holds Master of Law (LLM) and Bachelor of Law (LLB) degrees; a B Proc; Postgraduate Certificate in Advanced Taxation; B Compt Hons; and is a B Compt Certified Fraud Examiner.

Farzam Ehsani

CEO and Co-founder of VALR.com.

Farzam is the CEO and Co-Founder of VALR.com, a platform that bridges the gap between our traditional financial system and the new world of cryptocurrencies. He was previously the Blockchain Lead at Rand Merchant Bank and the FirstRand Group, and was the inaugural Chairperson of the South African Financial Blockchain Consortium. He previously worked at McKinsey & Company in Johannesburg, Deloitte Consulting in San Francisco, the Bahai World Centre in Haifa, and the United Nations in Nairobi. He studied economics at the University of California Berkeley.

Sean Sanders

CEO and Co-founder of Revix.

Sean is a CFA Charterholder and an expert in technology-focused investment management.He worked at Knife Capital, a growth equity focused venture capital firm, and as a portfolio manager and financial analyst for a specialty finance investment group. He was awarded summa cum laude for his honours research into the global ETF industry and offers a radical dynamism to bring about a new investment paradigm with Revix.

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New Cryptocurrency Regulations: What does this mean for the crypto market? - Moneyweb.co.za

The domestic asset management industry is also helping adoption of crypto by its incompetence. Most large-cap fund managers have struggled to beat their benchmarks, especially in recent years.

With the speed cryptocurrency is emerging as the Millennial generations alternative asset of choice in India, its hard to imagine that just two years ago a couple of blockchain pioneers were briefly in police custody. Sathvik Vishwanath and Harish BV, cofounders of a then five-year-old startup, were arrested in late 2018. No, they hadnt pulled off a shady initial coin offering. Their crime was that they put up a kiosk in a mall in Bangalore where customers could swap Bitcoin, Ether or Ripple for cash or vice versa. That was the whole point of Unocoin, their crypto token exchange. But the police were suspicious of the new-fangled ATM.

A lot has changed since then. Unocoin, which just raised financing from Tesla Inc.-backer Tim Drapers Draper Associates, is flourishing, together with other Indian blockchain ventures. Indias share of person-to-person virtual-currency trading in Asia has surged to 33%, the same as in China, according to Oslo-based Arcane Researchs analysis of volumes on Paxful and LocalBitcoins, the biggest platforms for transactions in the region.

Some of this is no doubt due to the bubbly rise this year in Bitcoin, which recently came within $100 of its all-time high after surpassing $19,000 for the first time since 2017. Even after Thursdays wobble, prices have still more than doubled this year.

But fundamental factors are also at play. Sending money to India in a tokenized form, and thus avoiding hefty bank charges, is becoming an option. Some customers of digital-asset exchanges, probably tech-savvy freelancers, receive tokens at regular intervals as payment for their work and convert them into rupees via their local bank accounts. Families in India are using the same channel to send money to students overseas.

Having the worlds largest diaspora and more than $100 billion in two-way money flows last year isnt the only thing. Prime Minister Narendra Modis disastrous ban on 86% of the countrys currency in November 2016 shook Indians faith in fiat money. Add the fear of leaving spare cash in banks when three major deposit-taking institutions have crumbled in the past 15 months. No wonder Arcane expects Indian crypto volumes to overtake Chinas.

The domestic asset management industry is also helping adoption of crypto by its incompetence. Most large-cap fund managers have struggled to beat their benchmarks, especially in recent years. The Nifty 50 index has returned only about 2% annually in dollar terms over the past decade. Yet, as Bloomberg Intelligences Gaurav Patankar and Morgan Barna have shown, lack of performance hasnt kept managers from pocketing high fees.

Disgruntled younger savers are taking note, and dipping their toes in U.S. exchange-traded funds. At 1%, international allocation is still tiny, the Bloomberg Intelligence analysts say, but its growing rapidly. Ditto for crypto-investing, even though holding a highly volatile digital asset over the long term isnt for the faint of heart. Only 600 of Unocoins 1.2 million customers have started a systematic buying plan to invest (mostly) in Bitcoin. But 99.5% of them are sitting on profit, and must be bragging about it to their friends.

Theres one dampener: regulation. Nobody wants a return to 2018, when the Reserve Bank, the monetary authority, instructed banks not to entertain customers who dealt in virtual currency. The draconian approach nearly strangled Indias blockchain revolution. The action against Unocoins kiosk in Bangalore was like the heavy hand of the state crashing down on a kids lemonade stand. If folks in Indias technology capital couldnt pay cash to buy digital tokens, then the asset was effectively being banned nationwide.

In hindsight, the founders ordeal with the police proved to be a blessing in disguise. Young entrepreneurs joined together, went to the Supreme Court in New Delhi and got the RBIs direction to banks declared unconstitutional. That was in March. Already, the exchange has seen a fivefold jump in trading, averaging $150,000 a day, from $30,000 before the courts verdict. Of late, trading is much higher, thanks to the rally in Bitcoin prices. Larger bourses such as CoinDCX were witnessing daily volumes of almost $700,000, when I last checked.

The players are urging the government to bring digital assets under the existing money-laundering law, which will give the industry legitimacy. The next step would be to regulate the tokens as money or securities, depending on their use.

Indias phlegmatic bureaucracy may wonder if this is all a craze. Perhaps not. It isnt even unique to Indian Millennial and Generation Z consumers. Wringing the global banking industry dry of its exorbitant fees, and putting more purchasing power in peoples hands after the Covid-19 pandemic, will be a worldwide goal. In their study titled, What We Must Do to Rebuild, Deutsche Bank AG economists are advising companies and policy makers to design alternatives to credit cards and remove middleman fees. In the short run, conventional fintech will help, but in the longer term, major economies will all do this by replacing cash with their own central bank digital currencies.

Thats when older consumers will join in. If they dont, theyll get get stuck, and not just figuratively. Automatically triggered crypto smart contracts will make it possible for self-driving cars to switch lanes faster than others. Commuters will be continuously paying one another in official digital currencies or in stablecoins like Facebook Inc.s proposed Libra, private tokens whose values are fixed against fiat money.

The Indian Millennials have read the tea leaves right.

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Indian cryptocurrency startups victory bigger than the price of Bitcoin - Financial Express

In recent times the use of Stablecoins has gained momentum amid high volatility and the strong bullish trend currently in play at the crypto market.

Such evidence was attributed to the daily trading volume seen in the worlds leading stablecoins, which at the time of writing Tethers price was $1.00 with a daily trading volume now at 43.4 billion.

Also, the fast-rising USDC, a stable coin project founded by Circle and Coinbase, in recent days has shown significant use among crypto investors.

Data retrieved from Glassnode revealed over 12million USDC were moved in just two transactions some hours ago.

What are Stablecoins?

Stablecoins are cryptocurrencies created to minimize the price swings that occur in an asset. They are usually pegged to fiat currencies and often exchange-traded commodities.

Global Investors and traders are using it to give their investment portfolios exposure to the US Dollar during these times when uncertainty is high as a result of the worst pandemic (COVID-19) known to man.

Recall Nairametrics, a few months ago broke the news on, U.S national banks now permitted to hold reserve currencies for stablecoins (Tether, Circle), meaning more investors now use stable coins in hedging against the volatility often prevalent in the crypto market.

The letter which was released by the Office of the Comptroller of the Currency (OCC) responds to questions regarding the application of stablecoin-related bank activities.

It concludes that national banks and federal savings associations may hold reserves on behalf of customers who issue stablecoins in situations where the coins are held in hosted wallets.

What you should know

Tether is designed as a blockchain-based cryptocurrency whose digital coins in circulation are backed by the same value of traditional fiat currencies, like the U.S dollar, Japanese Yen, or the Euro. It trades under the ticker symbol USDT.

USDC is a fully collateralized US dollar stablecoin. It is an Ethereum powered coin and is the brainchild of CENTRE, an open-source project bootstrapped by contributions from Circle and Coinbase.

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$385 million worth of Bitcoin moved by unknown identity - Nairametrics

Representatives from law enforcement and the judiciary, Financial Intelligence Units (FIUs), international organizations and the private sector have met virtually to shape international cross-sector solutions against the criminal use of cryptocurrencies.

Involving more than 2,000 participants from 132 countries across two days (November 18-19), the 4th Global Conference on Criminal Finances and Cryptocurrencies was co-organized by INTERPOL, Europol and the Basel Institute on Governance. The annual conference is an initiative of the Working Group on cryptocurrencies and money laundering established in 2016 by the three organizations, and aims to strengthen knowledge, expertise and best practices for financial investigations and intelligence on virtual assets and cryptocurrencies.

Recent increases in the number and quality of investigations in the field of cryptocurrency-facilitated crime and subsequent money laundering means that law enforcement and other public entities are continuing to enhance their level of knowledge and expertise in this crime area. In this regard, the conference served as an opportunity to underline the need for countries and jurisdictions to increase the exchange of tactical information and best practices, so that lessons learnt by one entity can be useful to others.

The conference underlined the need to extend capabilities on how to investigate virtual assets, and the necessity of applying rules to regulate virtual asset service providers to prevent money laundering.

A multi-agency and multi-disciplinary approach involving both the private and public sectors is key to tackling criminal finances and the misuse of cryptocurrencies, said INTERPOLs Director of Organized and Emerging Crime. By combining the expertise and data on financial crime held by the private sector with the investigative capabilities of law enforcement, we can enhance our collective capabilities and scale up efforts against criminal finances.

The conference agenda included trends and investigations on cryptocurrency crime, exploring criminal flows and operations in dark markets, ransomware and sextortion case studies, money laundering involving virtual assets, and the transfer of drug proceeds using cryptocurrencies.

Participants at the conference endorsed recommendations on capacity building initiatives to extend capabilities on how to investigate virtual assets, establishing clear regulatory framework to prevent money laundering, adopting follow the money strategies against criminal proceeds, strengthening information exchange to dismantle criminal networks, and exploiting new technologies in criminal finances investigations.

The tripartite working groups objectives include gathering, analyzing and exchanging non-operational information on the use of virtual assets, and creating a network of practitioners and experts in the field, so as to collectively establish best practices and provide assistance beyond the working group.

The Basel Institute on Governance will host the next edition of the conference in the second half of 2021.

Read more at INTERPOL

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Countries Come Together to Fight Cryptocurrency Crimes - HSToday

Cryptocurrency is steadily winning grounds. You can use cryptocurrency as an investment or a means of payment. Its a digital alternative to cash or credit cards to make everyday payments. In the past, the crypto business sounded scary. But many are now gaining trust and investing in the different types of cryptocurrencies available.

What is blockchain cryptocurrency?

Blockchain cryptocurrency is a digital asset that works as a medium of exchange. Its different from the common traditional currencies in that it works on digital channels with strong encryption to secure all online financial transactions. The encryption layers also control the creation of additional units and also verify the transfer of assets. There are various types of blockchain cryptocurrencies such as:

1. Bitcoin

Bitcoin is one of the commonly used currencies. Its perceived to be an original cryptocurrency and was created in 2009. Bitcoin uses blockchain technology and enables users to make peer-to-peer transactions. The transactions are secured through an algorithm within the blockchain. You can view the transactions, but only the bitcoin owner can decrypt it using a private key.

Bitcoins are different from bank transactions in that theres no central regulatory authority. The users manage and control the transactions, which allows for anonymous exchanges. You can use Bitcoin to pay bills using Bitcoin debit cards. You can also use Bitcoins in Bitcoin licensed casinos to pay for poker and slot games.

2. Litecoin

Litecoin is a Bitcoin alternative, which was launched in 2011. Like other cryptocurrencies, its an open-source and a global payment network. Is there a difference between Litecoin and bitcoin? Yes, some are listed below;Litecoin offers faster transaction times than bitcoinThe coin limit for Litecoin is 84 million, while the limit for Bitcoin is 21 million.Both use different algorithms; Litecoin is a scrypt, while Bitcoin is SHA-256.

3. Bitcoin Cash

Bitcoin cash is a type of digital currency. It was designed to enhance some of the Bitcoin features and came with many gains. The cryptocurrency was launched in 2017 and enhanced the block sizes, enabling more and faster transactions. The launch of Bitcoin Cash was supported by some key Bitcoin investors, such as Roger ver, who was for the idea that Bitcoins block size limit inhibits its ability to scale or accrue value.

4. Stellar Lumen

Stellar Lumen operates as an intermediary currency and facilitates currency exchange. Its borderless and allows for exchanges between different currencies from one owner to another. With Stellar, you can create, send, and trade in different digital forms of money, pesos, dollars, Bitcoin, and many more. It allows the worlds financial systems to operate on a single network.

5. Ethereum

Ethereum is an open-source platform and a type of blockchain technology lanced in 2015. Ethereum is accessible worldwide, and you can use it to write codes that control digital values and run as programmed.

It helps in the tracking of ownership of digital currency transactions. It also runs the programming code on decentralized applications allowing application developers to use the Ethereum network for paying the transaction fees and services.

Conclusion

Cryptocurrencies are now used as a payment mode, and you can use them to pay bills in places that allow such transitions. To trade in cryptocurrency, choose an exchange wisely. Besides, cryptocurrencies arent regulated by a centralized body.

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Common Types of Cryptocurrency that You Should Know - Blockchain News

With the exception of BitMEX and Arthur Hayes, the U.S. Commodity Futures Trading Commission doesnt seem to have any other cryptocurrency exchanges, blockchain company executives or DeFi projects on its enforcement radar at least not in the immediate future.

Last month, the CFTC charged cryptocurrency exchange BitMEX and several senior company executives including CEO and co-founder Hayes with operating an unregistered trading platform and violating the know-your-customer and anti-money laundering (KYC/AML) requirements under the Bank Secrecy Act. Despite the criminal charges, Hayes a Hong Kong resident has remained out of reach of U.S. authorities because of a suspended extradition treaty.

CFTC chairman Heath Tarbert said during a recent CoinDesk event that the agency might be looking at other noncompliant cryptocurrency exchanges and DeFi projects.

When asked if CFTC is investigating other platforms as well, Tarbert reportedly replied: Ill say maybe.

But in reality, the CFTC doesnt seem like it is looking into any more cryptocurrency exchanges in an official manner at this time.

Freedom of Information Act requests sent by Forkast.News to the CFTC since April reveal that the agency investigated Arthur Hayes and BitMEXs parent company HDR Global Trading. But the CFTC would not disclose more details or subpoenas under the enforcement-themed exemption 7a because an active investigation was underway. A second FOIA request made by Forkast.News last month for information on the top cryptocurrency exchanges and a number DeFi projects has come back from the CFTC with a no documents response.

The difference between FOIA exemption 7a [which is used to withhold documents due to law enforcement proceedings] and no responsive documents reply is the difference between meat and vegetables, attorney David Reischer, CEO of LegalAdvice.com, told Forkast.News. The 7a exemption requires a two-step analysis on whether a law enforcement proceeding is pending or prospective, and the release of information about it could reasonably be expected to cause some actual harm. The no responsive documents reply means that the agency searched and found no relevant records.

Braden Perry, a former CFTC enforcement attorney and now a law partner at Kennyhertz Perry, believes that the commission would go after the low hanging fruit of Bank Secrecy Act violations for not having adequate know-your-customer and anti money laundering provisions, which is what allegedly did Hayes and BitMEX in, but would stop short of broad regulatory action because a hasty attempt to reign in every potential for wrongdoing would likely fail and cause more damage than good to the DeFi environment.

The CFTCs increasingly expanded view of their jurisdiction will likely be challenged, especially against offshore exchanges and participants that have limited ties to the United States, Perry told Forkast.News. This is dangerous territory for the CFTC.

Perry points to the possibility that a campaign against DeFi platforms would be regulation by enforcement, as opposed to a defined regulatory framework, transparent and clear to all participants.

The last thing any industry wants is what the CFTC appears to be doing: regulation by enforcement, in which agencies decide that some practices should have been illegal, and instead of declaring it illegal from now on through rulemaking, go back and prosecute the people who were doing it before, Perry added But that regulatory framework cannot catch innovation and many times frustrate those willing to adopt new technology.

As Forkast.News has previously reported, there is a regulatory framework for cryptocurrency exchanges and DeFi that is making its way through Congress.

The Digital Commodity Exchange Act (DCEA) would seek to regulate the trading venues which list emerging digital commodities, such as Bitcoin, Ether, their forks, and other similar digital assets, for trading, to an official public summary of the bill. The end result of the bill would be the creation of a digital commodity exchange, or DCE, to replace the existing regulatory setup of exchanges being regulated as money service providers. The DCEA also delineates legislative responsibilities for token creation and sales, which would categorize the token itself as a commodity under the purview of the CFTC.

While Perry says the proposed bill is a start and hits some existing pain points such as custody of funds and market data, theres not enough clarity in the bill to bring exchanges and projects to the U.S. from their offshore domiciles.

If the CFTC really wants to reign in offshore market participants, they need to understand their lack of action is pushing these companies offshore, Perry said. Without a transparent structure, the DeFis are stuck watching their back as opposed to looking to the future.

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After BitMEX, will CFTC target more cryptocurrency exchanges and DeFi? - Forkast News

Warren Buffett, meanwhile, has said cryptocurrencies will come to a bad end.

The International Compliance Association (ICA) is a professional membership and awarding body. ICA is the leading global provider of professional, certificated qualifications in anti-money laundering; governance, risk, and compliance; and financial crime prevention. ICA members are recognized globally for their commitment to best compliance practice and an enhanced professional reputation. To find out more, visit the ICA website.

When such esteemed (and profitable) investors have contrasting views about cryptocurrency, it is hard for the rest of us to say if its influence is positive or negative. However, one thing is certain: It is here to stay.

Cryptocurrency is no longer the plaything of criminals or confined to dark corners of the Web. These views are outdated excuses to avoid confronting it. While no one can claim to be an expert, its still an area we must try to understand. We shouldnt judge ourselves too harshly, as it is a complicated topic, but by accepting it and trying to come to grips with what it isand how it workswe will be better placed to avoid regulatory censure and benefit from it.

This article will illustrate some of the challenges, even mysteries, of cryptocurrency and highlight the importance of everyone in compliance staying on top of it all. Well look at what regulators are trying to do, and we will also give you a tip on where to go to study this complex topic further.

As the saying goes, you cant run before you can walk, so in this situation you need to understand the technology before comprehending how it is used. Cryptocurrency, blockchain, distributed ledger technology (DLT)these are all terms becoming more common as they gain higher levels of adoption. It can be great for compliance (for example, DLT can be used to bring more transparency to business transactions and speed up global commerce), but it also has the potential to be an asset for criminals (the anonymity provided through blockchain can create a haven for bad actors to operate within).

The fast-evolving blockchain and distributed ledger technologies have the potential to radically change the financial landscape. But, their speed, global reach and above all - anonymity - also attract those who want to escape authorities scrutiny.

Source: Financial Action Task Force

What about for the regulator? This is not as clear cut, as they sit in the middle. Too much regulation stifles growth and adoption at a time when the world is crying out for developments and improvements to how business is done, but too slack an approach allows criminals to run riot and exploit holes in regulation.

The problem for compliance professionals, then, is how to treat this burgeoning technology when we begin to encounter it? Its really complicated, but thats OKwere all discovering and trying to understand it together. As with all risks, there are threats and there are opportunities. Clearly, we must follow regulatory guidance, but what happens when that evolves or is updated? Equally, what happens when new technology emerges so quickly that regulation cant keep up? There are so many new products and novel ways of moving value globally that criminals are poised to exploit that regulators have a mighty challenge on their hands to stay abreast. So, lets take a breath and see how regulators and authorities are attempting to do exactly that.

Bitcoin exploded onto the scene in 2009, immediately catching the attention of the Financial Action Task Force (FATF). The most recent additional guidance was added to their recommendations in 2019. As part of that addition, a 12-month review was planned for June 2020, and a survey of its membership and its broader global network was carried out in March 2020. Thirty-eight FATF members (37 jurisdictions and 1 regional organization) and 16 FATF-style regional body member jurisdictions responded.

Quite often when a new regulation is issued, or guidance is given on a specific topic, there is the temptation to feel its contents are sufficient to cover the need and the issue resolved. However, it is rarely that simple. Regulations are complicated, and the guidance that follows can take multiple iterations to get right. This is especially true in such fast-paced areas as new technology, virtual assets, and cryptocurrency.

While the recommendations are being implemented, there is still a long way to go to total adoption and full regulation. The FATF is aiming to bring consistency through its virtual asset service provider frameworks, its recommendations, and its review.

In addition to the recommendations from the FATF, other jurisdictions are coming to terms with how to regulate cryptocurrency. The European Union has found it is hard to set clear and strict rules given the opaque nature of the Internet (anonymity provided by IP addresses, data being moved quickly, locations disguised via a virtual network, etc.). It is proving near impossible to apply sanctions in the world of cyber in the same way as against arms dealers or nuclear proliferation activities.

Nevertheless, the European Union in November 2020 imposed its first cyber-sanctions regime targeting Russian, North Korean, and Chinese actors deemed responsible for cyber-attacks against EU member states. Similarly, the United States has also pursued sanctions and indictments against Russian, North Korean, and Chinese actors. However, attributing blame and guilt in the cyber-sphere often lacks what would otherwise be deemed essential evidence, either because governments dont have access to incontrovertible proof or because they are unwilling to provide it.

Further, given IP addresses can be altered or hidden, the location of a perpetrators address constitutes neither adequate nor necessarily correct evidence of their true location. The easily blurred and untraceable nature of cyber-space will therefore make identifying the complete networks of individuals difficult. Cyber-sanctions may consequently not result in significant asset freezes or have much impact on the financial networks supporting illicit cyber-actors. Thus, its unsurprising that its taking some time for authorities to come to grips with it all.

The United States has yet to formulate a consistent legal approach to cryptocurrencies, with laws varying from state to state. Federal authorities even differ in their definition of the term: The Financial Crimes Enforcement Network (FinCEN) doesnt yet consider cryptocurrencies legal tender; in contrast, the Internal Revenue Service (IRS) regards cryptocurrencies as property. Different terms being used for the same thing is just another example of how complicated this area is.

The situation in China is different. Cryptocurrency was initially handled very cautiously there but more recently has received some backing. In 2017, the Peoples Bank of China banned initial coin offerings and cryptocurrency exchanges and attempted to root out the industry by making token sales illegal. The biggest exchanges thus ceased trading. This all changed in 2019 when a Chinese court ruled Bitcoin was digital property. Since then there has been a shift in cryptocurrency adoption, with Chinese President Xi Jinping calling for an increase in development efforts on blockchain. There is still some caution, but China is certainly a country with development on its mind.

Why is this all important to you? Well, the adoption of virtual assets, blockchain, and cryptocurrency is rapidly increasinga recent report by Chainanalysis found that of the 154 countries analyzed, 92 percent had some sort of cryptocurrency activity. The way we work, bank, and live in years to come could well look very different to now, with some of these technologies being used to underpin our basic activities.

In a work environment, and focusing on compliance, it is going to be vital to not just monitor these changes but to take action to ensure you and your business remain compliant. A company that fails to evolve will lag behind, and the same applies to compliance professionalsif you dont keep yourself up to date, you too will be out of the loop. Educate yourself about the technology; demystify it. If youre able to understand it and know what youre dealing with, this will help you to manage risks and leverage value. Remember that it works both ways. If youre a FinTech, understand how the technology is exposed to risk through its features and usability and find ways to control it.

There is a plethora of information available on virtual assets, crypto, blockchain, and so on, but to stay on top of it all is almost a full-time job. As mentioned at the start, no one is an expert in this area yet, so all we can do is educate ourselves as best we can and then share that knowledge.

Cryptocurrency is confusingthere is little point in pretending otherwise. But through education and sharing knowledge, we are all better able to understand it and adapt to its adoption and continued use. Its here to stay, so we may as well get on board and enjoy the ride.

The International Compliance Association is a sister company to Compliance Week. Both organizations are under the umbrella of Wilmington plc.

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Cryptocurrency's future: What compliance needs to know | Article - Compliance Week