Each region in the world has its own regulatory body. Some regulations are identical while others are different. Here are some cryptocurrency regulations.
Financial Crimes Enforcement Network:
Because cryptocurrencies are money, the Financial Crimes Enforcement Network (FinCEN) requires them to be regulated. FinCEN grants licenses to crypto service providers; the network requires them to apply AML compliance standards and regularly track event and transaction data and submit reports.
SEC is the Securities and Exchange Commission:
Because the Securities and Exchange Commission (SEC) considers cryptos to be cash, securities, and cash equivalents, crypto exchanges must be registered. Individuals trading cryptocurrency must also follow SEC regulations and securities laws.
The Commodity Futures Trading Commission (CFTC):
The Commodity Futures Trading Commission (CFTC) views cryptocurrencies as commodities, similar to gold and other financial items, and has rules governing crypto transactions.
The difficulties of achieving cryptocurrency compliance
Cryptocurrency compliance, like any emerging innovation, is fraught with difficulties, including the following:
- The available pre-existing customer behavior profiles are insufficient. Trying to predict and understand the abnormal and typical behavior of people is a huge challenge.
- The crypto market is constantly littered with new technology and trends. As a result, there is a continuing need to update compliance requirements to reduce money laundering and the threat of scams.
- Creating legislation that applies to all types of crypto assets is complex and time consuming. In addition, different regions have different regulatory bodies, which can be problematic due to differences in compliance regulations.
The main motivation for the development of cryptos was the desire for decentralization and anonymity in financial transactions. Governments and traditional financial institutions use restrictions and levies to control and influence how you spend your money.
Crypto-compliance attempts to mitigate the drawbacks of digital assets, but it appears that crypto-compliance undermines the fundamental purpose of cryptocurrency. As the crypto industry strives for perfection, crypto compliance seeks to monitor and influence how you use your digital assets.