Without regulation and law enforcement, the encryption industry cannot go to the public
Whether the encryption industry or encryption investment can go to the public depends on whether regulators can establish a protection framework for consumers.
The basis of any value transaction is trust. Whether it's a big deal or a higher value transaction, the more trust the two sides have on each other, the more confident they are to trade.
To achieve this goal, bitcoin (BTC) and other cryptocurrencies have made great contributions. With blockchain technology, they create a decentralized and trusted environment. Loyal fans who already understand this are the ones most willing to spend a lot of money on the encryption revolution. But in fact, ordinary consumers are far from that.
Some liberals may not agree, but in order to expand the scale of the encryption world, it needs to be more widely used. Apart from the decentralized and trusted environment brought about by blockchain technology, ordinary consumers need another set of protection. That is to say, when the situation is serious, they can have the object of representation.
There are layers
Blockchain technology does make a great contribution to allowing participants to exchange value in a de trusted environment. If you don't share your private key, no one can steal your value assets. Teaching these to novices is the basis for them to buy encrypted assets. Although many people think that the next step will hinder the development of the technology, in fact, the regulation in the field of encryption will undoubtedly accelerate the process. The more levels of security we offer consumers, the more confident new investors and adopters will be to participate.
Rules make freedom the master
The Bank Secrecy Act, which came into effect in the 1970s, is the first important legislation on anti money laundering and terrorist financing in the United States. In essence, it forced banks to cooperate with the U.S. government to combat financial crimes. After the terrorist attacks on the World Trade Center (WTC) in September 2001, the Patriot Act was born randomly, and in the same way, further opened the communication channels between banks and the government.
Fast forward to 2019, an international regulatory agency called the Financial Action Task Force extends the travel rule rules to virtual assets and exchanges outside banks. The rules require virtual asset service providers to share identities for users whose trading assets are worth $1000 or more.
While tracking and providing this information sounds simple, it should be. But it also means that virtual asset service providers need to complete a variety of other tasks to achieve compatibility, including:
1. Establish a typical encrypted transaction for reference, so as to find out those potential criminal activities.
2. Regularly review customer wallets.
3. Share with other virtual asset providers and authorities the potential blacklist of ￥ *.
4. Share KYC information with virtual asset providers and authorities.
Of course, the inherent challenges of FATF's travel rule rules still exist. First, it needs to buy from virtual asset providers that use different technologies to run blockchain projects and exchanges. This makes it more difficult to track the * * at the granularity level. Nevertheless, the benefits of data transfer rules outweigh these challenges. It goes beyond the typical KYC program followed by most cryptographic service providers. As we all know, KYC is mainly related to the internal process of the organization, while the travel rule rules are much broader in nature. It promotes transparency for virtual asset providers and governments, aiming to go beyond the idea of a single country signing its own encryption rules.
These tools will help regulate in the future
Recently, the Ontario Securities Commission of Canada ruled that bitmex, the cryptocurrency exchange operating in the Seychelles Islands, was not properly registered and could not serve local residents, so new registrations and transactions for Ontario residents had to be stopped.
In addition, more such rulings will continue to surface, forcing virtual asset service providers to either adjust and comply or take risks associated with conducting business under supervision. In the long run, the former is more suitable for encryption enterprises and investors than the latter.
More tools now, and beyond, will help regulators continue to develop better frameworks. They allow ordinary consumers to enter the cryptocurrency field more confidently through any censored channel.
Most zealous encryption traders are familiar with the exploration channels of blockchain, whether developed by public or private companies, with the purpose of digging deeper into the origin of transactions. This provides the technology required for law enforcement to track stolen funds, money laundering and other criminal transactions using cryptocurrency. Law enforcement increases trust in ecosystems and makes them safer.
The risk scoring solution being developed not only enables market participants such as exchanges and individuals to judge whether there is a risk in the other party's wallet or proposed transaction, but also allows exchanges to avoid stolen funds, money laundering and other undesirable behaviors, thus increasing trust in the ecosystem.
The future of encryption regulation is happening
Just in the past few days, the meeting of state banking regulators, which represents regulators from various states and regions in the United States, announced that a new regulatory framework would be introduced for payment companies, money service companies and cryptocurrency companies. (Montana, District of Columbia and Puerto Rico are not included)
The new framework calls for a thorough review of "anti money laundering" by major payment providers such as Western Union, paypal and 76 other money services and encryption related businesses. Overall, the new framework will regulate payment services, which, according to statistics, transfer more than $1 trillion a year from customers.
