Recommended Regulations: Crypto Working Groups urge adoption


Although the cryptocurrency sector is still viewed as the "Wild West" by some governments and regulators, continued adoption and new use cases show that digital currencies will remain. Some even argue that blockchain-based networks and decentralized financial or DeFi platforms could soon replace traditional financial systems.

However, despite ongoing advances, the crypto industry is still young and therefore needs to evolve before it can be widely accepted. One area that needs to be addressed more deeply, especially within the crypto space, is regulation.

Mohamed El-Erian, Chief Economic Advisor at Allianz - a German multinational financial services company - said in an article in the Financial Times that it is the duty of crypto advocates to maintain better relationships with regulatory actors, given the disruptive nature of the new technology.

Fortunately, some members of the crypto community understand that relationships with regulators, policymakers, and the public sector are necessary to foster adoption. As a result, working groups are starting to be formed that focus on developing standards for the blockchain space.

Working groups drive innovations for introduction

For example, leading companies in the cash-to-crypto industry recently announced the formation of the Cryptocurrency Compliance Cooperative (CCC). Founded by Bitcoin ATM operators DigitalMint and Coinsource along with blockchain analytics platform Chainalysis, the CCC is a collaborative association that aims to develop compliance standards to legitimize the Bitcoin ATM industry in the United States.

This is especially important given that nearly 48 cryptocurrency ATMs are installed in the United States every day. While impressive, industry participants previously noted that in countries like Canada, know-your-customer compliance for crypto ATMs was only recently implemented.

Bo Oney, Executive Vice President of Operations and Head of Compliance at Coinsource, told Cointelegraph that although there has been exponential growth and maturity in the cash-to-crypto industry - particularly in Bitcoin ATMs in the United States - there is still a lack of anti-money laundering processes between companies. Many of these operators also do not have financial crime prevention departments. Hence, Oney stated that the CCC was created to fight fraud and nefarious use cases:

“The best way to master the challenges of the cash-to-crypto industry is this cooperation. We plan to publish logical and responsible standards that adequately address the concerns we see and then share them with our industry. We hope that these will be adopted to a large extent by all companies in this industry and that we can define future regulations. "

While developing standards for the cash-to-crypto industry is the main goal of the CCC, it is important to point out the collaborative nature of the association. Marc Grens, co-founder and president of DigitalMint, told Cointelegraph that CCC hopes to bring together some of the best minds in the industry. Grens noted that this will ultimately allow key players in the field to join forces to set standards for an ever-growing, often misunderstood sector.

Grens stressed that there wasn't much of an impact when FINCEN's Financial Crimes Enforcement Network released an official policy in 2013 stating that cryptocurrency exchanges and money senders must act as money services companies under the Banking Secrecy Act:

“These instructions are like sticking a square pen in a round hole. Regulators didn't know much about cryptocurrencies at the time and basically took that move and pushed this industry in there. However, these people do not look behind closed doors to see what is really going on. "

As Grens explained, the cash-to-cryptocurrency industry learned early on that companies need to come together to provide data-driven, objective facts about the fraudulent activity in the space: "The current money services business law is not enough to conduct illegal activity to fight ."

Oney continues to hope that the CCC will become a milestone for the crypto ecosystem as various actors join forces in an emerging, increasingly competitive space to develop standards to improve an industry: “We don't need government involvement to set standards set. ”

While this may be so, Oney said the CCC has close relationships with members of the U.S. law enforcement agencies, including those involved with the Federal Bureau of Investigation, the Department of Homeland Security, and local and state agencies. “We want to educate and communicate to these people what the standards should be. Then they can implement the guidelines. "

The CCC is just one example of a collaborative association working to define standards for the cryptocurrency sector to be adopted by regulators. Hailey Lennon, a partner at Anderson Kill law firm, told Cointelegraph that various trade associations have developed over the past several years. She mentioned that some of these include the Blockchain Association, the Virtual Commodity Association, and the Crypto Council for Innovation.

According to Lennon, it makes sense that crypto and blockchain companies want to be part of working groups and trade associations to train regulators, especially given all the different state and federal regulations floating around: "Regulation stifles innovation; A carefully worked out regulation does less harm. "

This certainly seems to be the case for the maturing cryptocurrency industry. For example, Chen Arad, chief operating officer of Solidus Labs - a risk monitoring platform for digital assets - told Cointelegraph that collaborative groups that share data and cross-market monitoring are key to answering the Bitcoin (BTC) Futures Exchange Traded Fund (ETF.) are) question. He noticed:

“The lack of joint surveillance arrangements in crypto is the main reason the SEC rejected Bitcoin ETF rule change requests. The SEC wants to know if traders are manipulating Bitcoin on more than one exchange. Monitoring for this requires data sharing agreements that would enable cross-market monitoring. "

Arad added that alongside the crypto sector, there are many examples of industry-driven self-regulation that have enabled new technologies to solve regulatory challenges and thrive. "The Credit Online Lending Network and the Securities Intermarket Surveillance Group were created by these industries to solve very similar cross-platform problems."

Will working groups make a difference?

Lennon pointed out that many of the aforementioned cryptocurrency working groups and collaborative associations are currently not recognized as official self-regulatory organizations or SROs. In turn, Lennon stated that it can be difficult for regulators to work with these groups:

“An SRO is usually given legislative powers by a regulatory authority, which enables it to draw up guidelines and enforce them in a particular industry. For example, FINRA is an SRO of the US Securities and Exchange Commission. Currently, none of the organizations mentioned here have the legislative power to act as SRO, and they are therefore more like professional associations or working groups that make suggestions on how regulations affect the space. "

Lennon explained that while these groups are helpful, they do not have the same authority as SROs. Zachary Kelman, Managing Partner of Kelman PLLC and General Counsel of Cointelegraph, agrees and believes that it is helpful for an organizing body to issue standards, but that the federal government generally looks at traditional industry standards: “The federal government has an agenda. You manage money services companies and want them to comply with certain laws. "

Even so, Kelman pointed out that it might be easier for cryptocurrency working groups to reach out to government regulators about standards.

“It may be possible to have a state-level standard for cryptocurrency ATMs as an educational tool for state regulators. If these standards are fairly consistent across the industry, this could help coordinate efforts across the country. "

While this makes sense, Lennon noted that another challenge is the growing number of working groups in the crypto space. Lennon is particularly concerned that so many workgroups have overlapping goals and potentially conflicting messages: “In a perfect world, many of these groups would work together or merge to bring the industry more cohesion. ”

https://dailyaffiliatemarketingnews.com/recommended-regulations-crypto-working-groups-urge-adoption/

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