The general theme in the cryptocurrency market in 2018 has been government . In many regions of the world, governments to be taking a more serious approach to monitoring the activities of the crypto ecosystem.
KYC and AML Procedures
The EU has been at the forefront of creating a robust regulatory framework for the burgeoning crypto market with a lot of emphasis on Know your Customer (KYC) and Anti-Money Laundering (AML) regulations. On May 14, 2018, the EU agreed to a at enforcing KYC and AML compliance in the crypto market.
According to the working group, robust KYC and AML regulations makes it difficult for criminal elements to use cryptos as a vehicle for perpetrating or hiding the proceeds from the illicit activities. As a result, different segments of the market including platforms and providers must carry out the same identity verification processes as banks.
Vetting the identity of customers is also essential in the against terrorist organizations who might take advantage of anonymous cryptocurrency transactions to fund their nefarious activities. In fact, together with money laundering, terrorist funding is the primary worry of many governments in the crypto sphere.
The EU aren’t the only ones calling for stricter KYC and AML regulations. In South Korea, anonymous trading is banned, and financial watchdogs the accounts of traders in search of inconsistencies and irregularities. Japan, via its Financial Services Agency (), has also on exchange platforms concerning KYC. In the United States, exchange platforms are mandated to observe strict KYC guidelines which must be satisfied before a user is allowed to trade.
Will Transparency Drive Crypto Adoption?
The mostly unregulated and anonymous nature of crypto transactions has made them a likely haven for criminals. Many experts believe that part of the meteoric rise in the prices of cryptocurrencies can be attributed to this aura of anonymity.
Presently, the total market capitalization of the cryptocurrency market stands at over . Cryptos have been identified as providing a conduit for illegal cash flows and the purchase of prohibited items, especially on the . Thus, commentators like Larry Fink, the chairman of has described digital tokens as an “index of money laundering.”
With these new EU regulations, much of this anonymity should be eroded, paving the way for a more legitimate feel to transactions. Further to that, law enforcement and regulatory officials will be able to track and monitor crypto payments.
On the flip side, illegal cryptocurrency transactions can be moved from online exchange platforms into dark web domains where they become virtually impossible to track. If that happens, at least, legitimate crypto traders can rest assured in the knowledge that their transactions will not be deemed suspicious. Thus, and other cryptos can begin to enjoy some semblance of which in turn will enhance their adoption in mainstream finance.
Already, there has been some response to the EU directive as exchange platforms are upgrading their KYC and AML procedures. BTCManager recently reported that Localbitcoins had introduced strict identity verification guidelines in compliance with the EU directive.
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The potential and benefits of and other are limited to one very critical factor – real-world adoption. The absence of which could also severely impede the growth of a decentralized economy. Moving forward in this regard is South Africa, which will soon be installing a cryptocurrency ATM for its citizens.
Move Over Fiat, bitcoin Is “In”
According to a in Business Insider, Johannesburg, South Africa’s largest city, will be getting a cryptocurrency ATM. The machine is said to support major cryptocurrencies, such as bitcoin, , and , and is expected to be fully functional by the third week of May 2018.
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George Neophytou, from Northwold Spar, the firm where the ATM is being installed, expressed his excitement as he leads the project:
“It will take away much the frustration of buying and selling cryptocurrency, and hopefully help make cryptocurrencies mainstream.”
By introducing cryptocurrencies to the average shopper, the ATM would not only drive awareness but also mitigate many myths regarding digital assets. After all, no book can explain the benefits of using digital currencies compared to a hands-on experience.
Additionally, the transaction can be carried out without a bank account, eliminating any institution-related concerns.
ATM Trend Catching Up
Earlier in 2015, a cryptocurrency ATM in Midrand, a small city near Johannesburg, that processed only bitcoin transactions, was shut down. Currently, 68 countries around the world have . The estimated 3,000 ATMs are spread across the globe, including countries like and Djibouti.
During his time in Europe, Neophytou was fascinated by the rate of cryptocurrency adoption. Inspiring the Northwold Spar executive to initiate the technology in his homeland.
For Neophytou, the “bitcoin accepted here” signs he came across in Germany was his “eureka moment.”
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The cost of a cryptocurrency ATM can range between R100,000 to R170,000 ($~7,800 – $~13,300). Although the South African Revenue Service () doesn’t regulate cryptocurrencies and their usage, the profits that are are taxable. To ensure that every move is done by the book, the ATM will be launched only when the T&Cs are finalized.
“If someone gets cryptocurrencies from this ATM, they must know that it is safe to use.”
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