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Since Bitcoin saw the dawn of the day in 2008, the crypto industry has come a long way. More than a decade later, there are hundreds of different cryptocurrencies available in the market and numerous exchanges and trading platforms spread across regions and time zones. While the industry has come a long way, due to increased adoption there are still concerns about the legitimacy of various platforms and projects and many people remain suspicious of cryptocurrencies.

These suspicions are valid, and the main reason for that is the lack of accountability of platforms dealing with cryptocurrencies due to the lack of regulations governing them. The lack of a clear regulatory framework and enforcement not only encourages the operation of fraudulent platforms, but also exposes the crypto sector to very serious problems such as money laundering and the financing of illegal and dangerous activities. When it comes to light, it will eventually cause more damage to real crypto users due to repression and other government restrictive measures.

In recent days, there have been numerous reports of investigations and arrests in the crypto industry, mainly as a result of violations of AML laws. These violations have been widespread in the industry recently CipherTrace Report passes that 56% of crypto exchanges do not meet AML and KYC requirements. Combining non-compliance with the fact that more than 70% of Bitcoin transactions were cross-border transactions and a significant portion of criminal money continues to flow into these exchange platforms is a good reason for the need for crypto regulations similar to those followed by traditional banking and financial institutions.

Echoing these revelations, the founder of STEX Vadym Kurylovych says, “Many crypto holders claim that the tightening of regulations in the crypto industry is destroying the whole idea of ​​the industry: fast, secure, anonymous money transfers without banks or state borders. But it’s not about destroying the primary idea of ​​cryptocurrency. It’s about maturing the industry. Bitcoin is rising in price, so are other cryptocurrencies. DeFi is a hot topic right now. This is drawing more and more people to the industry, which means that the turnover in cryptocurrency is increasing from year to year. That is why the governments and regulators must find ways to stop the money laundering and illegal activities that can take place if the exchanges do not follow KYC / AML. The loud arrests and investigations against the prominent market players prevent other smaller projects from operating without KYC and AML, set a bad example and encourage new startups to comply with the rules of the financial sector. Although it may not be 100% as digital assets are not regulated in every jurisdiction. “

While regulation is welcome in the crypto sector, governments and regulators must strive to strike a balance between control and ease of use, as well as the ease of undertaking crypto business to create a thriving financial ecosystem. For the most part, many crypto players choose not to comply with the rules in order to avoid the costs and sometimes even the bureaucratic hurdles associated with the licensing process under some of the current regulations. However, that should not justify non-compliance, as getting caught can have serious consequences. In fact, crypto exchanges should proactively ensure compliance and acquire the required licenses, even if that entails additional costs to address issues related to money laundering, terrorist financing and other illegal activities for the public good.

In Kurylovych’s words, “Of course it is easier not to comply with the rules. You will not lose new users due to the complicated onboarding process. You don’t have to pay the compliance team and get the expensive licenses. However, that is not true if you do not know who your users are and if they are acting to make money to fund horrible illegal activities such as terrorism. You may also be subject to penalties from various regulatory agencies if you accept money from other nationals, not just the countries where you are licensed. For example, you could face a heavy fine if you operate, transfer money or accept payments in Europe but fail to comply with anti-money laundering guidelines.

For example, STEX is licensed in Estonia and we comply with EU cryptocurrency regulations. Estonian jurisdiction is one of the most progressive in Europe when it comes to cryptocurrencies ”

When we weigh the pros and cons, it is clear that regulation is necessary for the crypto industry to prevent criminal activity and also to ensure the safety and security of the users’ investments. And currently some countries have regulations that are more favorable to the industry than others. To bring uniformity, it is time for the governments to put their heads together and formulate crypto industry friendly rules so that the crypto exchanges and service providers around the world can operate legitimately, in line with the legal frameworks of the respective countries, just like traditional financial institutions.

Image by PIRO4D from Pixabay

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