Ever since Bitcoin saw the dawn of the day in 2008, the crypto industry has come a long way. Over a decade later, there are hundreds of different cryptocurrencies available in the market and numerous exchanges and trading platforms spread across geographies and time zones. While the industry has come a long way, thanks to increased adoption there are still concerns surrounding the legitimacy of various platforms and projects and a lot of people continue to look at cryptocurrencies suspiciously.
These suspicions are rightly placed, and the main reason for that is the lack of accountability on the part of platforms dealing with cryptocurrencies due to the absence of regulations governing it. The lack of a clear regulatory framework and enforcement not only encourages the operation of fraudulent platforms but exposes the crypto sector to far serious issues like money laundering and financing of illicit as well as dangerous activities. When comes to light, it ends up causing more harm to genuine crypto users due to clampdowns and other restrictive actions of governments.
In recent days, there have been numerous reports of investigations and arrests in the crypto industry mainly due to violation of AML legislation. These violations are rampant in the industry as a recent CipherTrace report states that over 56% of crypto exchanges don’t satisfy AML and KYC requirements. Combining non-compliance with the fact that over 70% of Bitcoin transactions were cross-border transactions and a significant portion of criminal funds continue to pour into these exchange platforms makes a good case for the need for crypto regulations that are akin 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 destroys the whole idea of the industry: fast, secure, anonymous money transfers without banks or state borders. But it is not about destroying the primary cryptocurrency idea. It is about the industry maturing. Bitcoin is rising in price, other cryptocurrencies as well. DeFi is a hot topic now. This attracts more and more people to the industry, making cryptocurrency turnover bigger from year to year. That is why the governments and regulatory bodies need to find ways to stop money laundering and illegal activities that may occur if the exchanges will not follow KYC/AML. The loud arrests and investigations against the prominent market players prevent other smaller projects from operating without KYC and AML, give the bad example, and encourage new startups to comply with financial industry rules. Although, it might not be 100% since digital assets are not regulated in every jurisdiction.”
While regulations are welcome in the crypto sector, the governments and regulatory bodies should attempt to strike a balance between control and ease-of-use, as well as ease of doing a crypto business to create a thriving financial ecosystem. For the most part, many crypto players choose to be non-compliant to avoid the costs and sometimes even the bureaucratic hurdles that accompany the licensing process under some of the current regulations. However, that shouldn’t be the justification for non-compliance as getting caught doing so can have serious repercussions. In fact, crypto exchanges should proactively ensure compliance and acquire the required licenses even if that means additional expenses to address issues related to money laundering, terrorist financing, and other illegal activities for the greater good.
In Kurylovych’s words, “It is easier to be non-compliant, of course. You do not lose new users because of the complicated onboarding process. You do not have to pay the compliance team and obtain the expensive licenses. However, that is not right if you do not know who your users are and if they are trading to earn money to finance some horrible illegal activities, like terrorism. You can also be the subject of the penalties from different regulatory bodies if you accept the funds from other nationals, not only from the countries where you are licensed. For example, you can have a serious penalty if you are operating in Europe, transfer money, or accepting payments but not compliant with The Anti-Money Laundering Directives.
For instance, STEX is licensed in Estonia, and we are compliant with the EU cryptocurrency regulations. Estonian jurisdiction is one the most progressive in Europe regarding cryptocurrencies”
Weighing the pros and cons, it is evident that regulations are necessary for the crypto industry to prevent criminal activities 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 compared to others. In order to bring uniformity, it is time for the governments to put their heads together and frame crypto-industry friendly regulations so that the crypto exchanges and services providers across the world can operate legitimately, in compliance with the legal frameworks of respective nations, just like traditional financial institutions.
Image by PIRO4D from Pixabay
- Crypto derivatives exchange Bit.com integrates with Copper ClearLoop for off-exchange settlement
- Spanish Crypto Exchange 2gether Won’t Reimburse All Stolen Funds From the 2020 Hack – Exchanges Bitcoin News
- Crypto Futures Exchange Bakkt Going Public at a Valuation of $2.1 Billion – Exchanges Bitcoin News
Crypto derivatives exchange Bit.com integrates with Copper ClearLoop for off-exchange settlement
Bit.com, a cryptocurrency derivatives exchange launched by Matrixport, today announced the completion of its integration with Copper ClearLoop, a platform provided by London-based digital asset custodian Copper.co, which facilitates instant, off-exchange cryptocurrency settlements.
This integration will allow institutional clients to keep their assets secure under Copper’s segregated custodian account, while trading on Bit.com and settling trades in their ClearLoop account. This solution could be extremely helpful for institutional traders because it ensures accessibility, convenience and bypasses security concerns typically linked to trading on cryptocurrency exchanges – including exchanges being hacked, or assets being frozen.
To date, institutional users trading crypto assets have had to move their assets from their secure cold wallets into the exchange’s hot wallets, a process that can often take between ten minutes to one hour. These delays are exacerbated when considering withdrawals and post-trade. ClearLoop eliminates this by enabling off-exchange settlement which takes less than one second.
ClearLoop ensures that both the client and the exchange have enough assets allocated to cover any position submitted by a trader before it is opened. Copper then settles trades instantly between parties after the trade has taken place. It also enables traders to have full control over their response to market motion and price action.
Spanish Crypto Exchange 2gether Won’t Reimburse All Stolen Funds From the 2020 Hack – Exchanges Bitcoin News
January 27, 2021January 27, 2021
Spanish cryptocurrency exchange 2gether has announced that it won’t compensate users for the full amount of bitcoin (BTC) and ether (ETH) stolen in August 2020. The exchange said that almost 5,000 of its customers won’t receive their cryptos under the compensation plan.
According to the announcement, 91% of the users will be fully compensated as part of the firm’s capital round to gather enough funds for the purpose. The crypto exchange argues that it cannot pay the full amount because of the higher prices seen in BTC and ETH.
However, the company offered some solutions to the 9% of users affected by the measure:
The company has offered these users the best solution it can reach with the funds raised in this round — a solution that involves replacing a maximum of 99% of the BTC and ETH stolen and not converted, and at a minimum, the value in euros that was lost at the cyberattack time. It excludes what was converted into capital or 2GT tokens, depending on the amount stolen in each case.
Customers can choose to either accept or reject the proposal made by 2gether. If the users decide to reject the mentioned solution, the exchange asks them to give the company “more time to try recovering the total amount of funds as soon as possible.”
The Spanish crypto firm also said it will enable a feature in its app to allow users to proceed with the solution offered. However, the company didn’t provide a timeline to obtain the remaining funds for the full compensation.
Per a newsletter sent via email to all 2gether customers, the capital round gathered over 1.5 million euros ($1.8 million).
However, the announcement sparked controversy among the crypto exchange’s customers on social media. On Twitter, a user expressed his disappointment on the matter:
Total disappointment. When subtracting the funds, you take from us all equally (well, not those who had BTC and ETH). Now it’s time to return, and you decide to shut up, giving everything back to some, to others 60% and to others between 30% and the rest to be paid in 4 years. Was this the fair thing to do?
On Aug. 1, 2020, 2gether suffered a cyberattack that affected several crypto trading accounts. At the time, the amount stolen by the hackers was over 1 million euros ($1.2 million as of press time).
What are your thoughts on this announcement? Let us know in the comments section below.
Author: by admin
Crypto Futures Exchange Bakkt Going Public at a Valuation of $2.1 Billion – Exchanges Bitcoin News
Bitcoin futures exchange Bakkt is going public via a merger with VPC Impact Acquisition Holdings, a special purpose acquisition company (SPAC) created for taking startup firms public.
Both companies have now confirmed the transaction, and will be listed on the New York Stock Exchange (NYSE) under a new name – Bakkt Holdings Inc., – sometime in the second quarter of 2021. Rumours about the deal have swelled since early January.
After the merger, Bakkt is expected to have an enterprise value of $2.1 billion, the company announced on Jan. 11. Bakkt was founded by Intercontinental Exchange (ICE), owners of the NYSE, in 2018 as an institutional crypto trading platform. But the exchange has faced stiff competition from market leaders such as the Chicago Mercantile Exchange (CME).
According to the announcement, the exchange will also raise an additional $582 million through a private placement, leveraging existing cash at VPC Impact Acquisition Holdings and contributions from ICE.
The money is expected to bankroll Bakkt’s pivot to developing consumer applications for digital assets. Bakkt is expanding its business model, with a new app that allows users to manage crypto assets, including bitcoin (BTC), along with reward and loyalty points, intended for launch in March.
Bakkt said that more than 400,000 customers have pre-registered for the app. The exchange, which supports over 30 loyalty program sponsors and 200 gift card merchants, is targeting 30 million users over the next five years. Starbucks has already integrated Bakkt Cash as a payment method for its clients.
In its statement, Bakkt detailed that it aims to “enable incremental consumer spending, reduce traditional payment costs and bolster loyalty programs, adding value for all key stakeholders within the payments and digital assets ecosystem.”
Bakkt’s announcement comes on the heels of U.S. crypto exchange Coinbase’s filing of a draft registration statement with the Securities and Exchange Commission (SEC) for an initial public offering (IPO).
Through the SPAC, the so-called blank-check firms that allow other companies to go public through them, Bakkt has avoided the often lengthy process associated with IPOs – roadshows, issuing of prospectus, selling shares to investors etc.
What do you think about Bakkt going public? Let us know in the comments section below.