The crypto industry is experiencing some exciting times. As the enormous institutions and giant companies come in, significant changes loom which will need to be addressed in quick succession.
Now there are some expected changes from the new FATF guidelines regarding cryptocurrencies service providers. The first change requires all crypto exchanges to verify all their user identities whenever amounts over $1000 in assets are traded.
In this article, we shall be exploring some of the expected outcomes emanating from the same.
The End To Anonymous Transactions
If you have been using cryptocurrency exchanges for the last couple of years, then you are familiar with the user identity verification procedure known as the KYC, short form for Know Your Customer protocol. The KYC is very common as a method, and nearly all trading platforms worldwide use it. As for those that don’t utilize the method, they will need to implement the KYC screening process in the next few days
The new set of guidelines by The Financial Action Money Of Money Laundering requires all businesses to verify their user identities. The rule will apply for users sending and receiving money beyond $1000 in a single transaction. It may not be a big deal, considering that there aren’t many anonymous platforms left after all.
Most of the exchanges may have implemented the mandatory procedure already, but things may turn out very different in other regards. You see, companies standing in the gap between the traditional finances and digital assets may be in a bit of a pickle. The new rule may cause slight trading delays and shakeups. It’s never a positive sign for companies and users.
There is also a fear that the new rule will increase the costs of making transactions. However, whether the scenario will come true or not remains to be seen. However it is still crucial to take possible outcomes into account. For small companies, the new change is unwelcome although there is no alternative but full compliance.
Analyzing Licensed Companies
The concept of Bitlicense is very familiar to bitcoin enthusiasts. Now, similar licenses for companies providing access to trading or lending and acting as funds custodians. Life may be a bit more difficult for companies such as these. Fact is, it may result in additional regulatory scrutiny for the companies that may not be directly involved in bitcoin and alternative market.
It’s difficult to predict whether additional scrutiny can be a bad thing. A growing sense of unease is being felt where certain service providers are concerned. Generally, it will be an interesting thing to pan out. Companies that will not be playing by the rules could lose their money transmitter license.
Positive Change For More Growth
The new rule is designed to bring positive attention to digital assets crypto. However, the opposite can also be felt. That’s why the country needs to employ support agencies to make sure they are fully compliant. It’s not entirely unlikely seeing companies violate some of the rules being set.
However, it all depends on the guidelines and how they are interpreted and implemented. It could be a way of separating the crypto world and the financial world. But still, rather than draw conclusions, it’s early.