In the recent past, governments around the globe are trying to regulate the controversial cryptocurrency. However, the latest appeal to do the same has come from a different place.
Identifying New Priorities
To gain some clarity and put to rest rumors that their businesses propel criminal money transfers, digital coin brokers, who usually frown over emerging regulation, are now the ones demanding their enforcement.
The urge to introduce KYC in digital currency trading is legitimate and backed by both eToro Europe Ltd. and BitPanda. The firms feel that this will be the stepping stone crypto needs to enter the mainstream market and penetrate new possibilities.
Eric Demuth of Vienna-based BitPanda feels regulations are necessary to understand where a business stands. Demuth, who frequents Austria’s Finance Ministry office to meet with regulators, also added that jurisdictions with loose regulations, such as Malta and Gibraltar, aren’t an attractive or interesting option.
London-based eToro expresses similar thoughts. While the platform was founded in 2007 and focused on the traditional financial markets, it now attracts more cryptocurrency traders who reportedly make up 75 percent of the business. Such data can’t be ignored, and the firm feels the need for transparency in the market is critical.
According to Iqbal Gandham, MD of eToro:
“The benefits of regulation are clear. An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself.”
Transparency and cryptocurrency in the same sentence? Well, for an investment option that mysteriously rose to an $800 billion industry, transparency hasn’t been a top priority for cryptocurrency businesses.
Regulations Can Propel Nations to Rake in Big Money
As reported on Bloomberg, countries, and companies with regulations in place are seemingly attracting more customers, in addition to higher tax revenues.
Japan is a great example and has set the benchmark when it comes to making new rules that focus on consumer interaction undertaken by crypto organizations and the on- and off-ramps between fiat and cryptocurrencies. The country has become the epicenter of development in this sector, pertaining to the supportive cryptocurrency regulations that exist.
Similarly, U.S-based Coinbase has strict KYC protocols and has a client base of over 20 million customers. The company is known to adhere to the law, and hence, has quickly become one of the most regulated businesses in the cryptosphere, famously referred to as the “Google of Crypto.”
This anecdote goes to show that regulations can help the business and the industry, as it reinstates trust towards the average individual. Trust plays a huge role in unregulated sectors, as several European crypto-firms have learned.
For European brokers, attracting institutional money is difficult, as investors tend to steer clear of sectors without a defined legal structure. Furthermore, self-imposed regulations (i.e. KYC processes deemed reliable by the company but not the government), don’t count as regulations for institutional investors.
Cryptocurrencies were introduced as a game-changer in allowing anonymous payments, but investors in Spain and the U.S. discovered the exact opposite, as tax agencies have demanded names and data from banks and brokers in the two countries in recent times.