As cryptocurrency theft and cryptocurrency money laundering increase daily, watchdogs around the world are being charged to introduce more transparent regulations.
Last month, European regulators agreed with a regulation requiring crypto exchanges to identify investors behind unhosted wallets (wallets not hosted by third parties).
In addition to Europe, regulatory agencies around the world are also in favor of applying the Know Your Customer (KYC) rule to non-hosted or self-hosted crypto wallets.
If regulations are set within the next few months, strict disclosure requirements may be imposed on transactions between European Union non-custodial wallets and cryptocurrency exchanges. It faces severe criticism from the European crypto industry.
Implementation of the first set of regulations is too fast: experts
Experts say that more than 70% of transactions come from unhosted wallets such as phones and computers, not from registered exchanges, so the implementation of the first set of regulations is “ for exchanges. I think it could be “too fast”. At the same time, they believe that a “subtle balance” of data privacy and disclosure requirements is needed.
Speech at the panel discussion “Know your cryptocurrency customers: full anonymity hacking And AML concerns? “ Maja Vujinovic, Managing Director of OGroup, hosted by the Financial Times on April 26, said: Criminal activity. But at the same time, what we’re seeing in Europe (the backlash from the crypto industry regarding data privacy requirements) is certainly more backlash against larger organizations. “
Vujinovic added that some large companies also don’t want to retain data because of debt, so they have the opportunity to create a new world where individuals can own their data.
Taylor pointed out that it is not operational easy for exchanges to implement KYC immediately, as cryptocurrencies function at the global level.
Recent Financial Action Task Force (FATF) guidance aims to extend the scope of travel rules to VASP when the transfer of virtual assets involves a self-managed wallet. This means that when an exchange sends a cipher to another exchange, both the sender’s and recipient’s names and account information will be available to both parties.
Panelists believed that the “deadline” here would be a problem again and could not start “next week”.
David Carlisle, Vice President of Policy and Regulatory for Elliptic, a provider of cryptographic compliance and risk management solutions, said that regulators are typically associated with privacy and data protection and protection, as well as financial crime, money laundering and sanctions avoidance. He said it has two purposes: to reduce the risk of doing so. ..
“But at this point, I think the focus tends to be overwhelmingly on how to prevent threats,” he said, with regulators enabling privacy-enhancing features. He added that he was trying to find the middle point of what to do. I’m trying to mitigate some risks.
Taylor demanded “consistency” in regulation at the global level, but other panelists disagree with governments around the world about cryptocurrencies, so the “one size fits all” approach is unsuccessful. I pointed out that it is possible.
David Jevans, CEO of CipherTrace, said: Customer technology may cover a wide range of cryptographic computing capabilities that can be easily provided to all of these crypto-asset service providers. “
A balance between data privacy and the required organizational credibility
While technologies that balance data privacy and organizational credibility are slowly emerging, panelists believe that a neutral position between regulators and the industry is the solution.
Vujinovic said: Performance needs to be improved. To actually adopt it, you need to actually scale the blockchain of this technology. You need to be able to integrate with these technologies. These are not easy to do on a large scale. “