Mar 2, 2020
Crypto-currencies: how will new regulation affect?
Crypto-currencies are a digital exchange medium that serves as a digital currency, without physical support, and with cryptographic content to control and securely manage transactions between users.
Crypto-currencies: current situation
In 2008, the appearance of Bitcoin initiated a serious change. The world economy was transformed and crypto-currencies began to compete with the traditional ones, sitting as the currency of the future.
Currently, some countries such as Switzerland, Japan, the Netherlands, Denmark and the United Kingdom are working on how to set regulations about the use of crypto-currencies and continue to actively investigate to offer necessary guarantees and an adequate environment.
The United Kingdom benefits from a highly-developed infrastructure, as seven of the largest crypto-currency companies have come together to create a regulatory body called CryptoUK.
The objective of this organization is to work with country’s regulators to create a safe environment for both crypto and blockchain companies and for people who make use of crypto-currencies and comply with regulations associated with KYC and AML.
If you want to know more about how to comply with KYC and AML regulations, download this guide.
Limits to the use of crypto-currencies
In July 2018, the Financial Conduct Authority (FCA) warned that crypto-currencies represent a great risk for consumers and the integrity of the market, encouraging their use for illegal activities, such as financial crime, terrorist financing, money laundering, and cyber-theft.
In relation to these signals, FCA ensures transparency and traceability of transactions, being backed by a regulation where investor protection and regulatory clarity are enhanced.
FCA is taking measures on currency exchanges and wallet providers to comply with anti-money laundering regulations, imposing banking controls on them.
The financial regulator of the United Kingdom emphasises that on January 10, 2020, all entities participating in any of the following activities must comply with AML regulations of the United Kingdom:
- Crypto-currency exchange services.
- Crypto-currency ATM services.
- Crypto-currency transaction.
- Token issuance.
- Open-source launch software that involves crypto-currencies.
Typographical transactions: Implications
Regulations for the prevention of money laundering in the UK require that all crypto-currencies transmission entities record detailed information of all users, including their name, official photo ID and proof of address or what the FCA calls “client’s due diligence”.
If a client’s identity based on the personal data that he has had to use previously to register seems doubtful, the law states that the service will be denied, complying with the established regulations and KYC procedures.
Solutions for crypto-currencies
Complying with the regulations required by the FCA, and in order to get more customers when identifying with full security and efficiency, we offer VideoID, a solution for identification through video in real-time, complying with the legal regulations associated with KYC processes and with AML5 and eIDAS directives, having the same level of security as face-to-face identification.
Its main advantages are its omnichannel application at any time, place and without any friction. It is a simple and safe process for any company at any country linked to crypto-currencies, increasing conversion rate to 84% and reducing time to market from 3 weeks to 3 minutes.