Cryptocurrency brokers based in the EU are demanding more transparency at the hands of industry regulators. It has become clear that digital currency brokers would much rather face clear-cut rules and increased transparency in the market as opposed to dealing with the stigma that surrounds the industry.
This is considered as a sign of market maturing and the proactive engagement with regulators by Bitcoin exchanges such as eToro and Bitpanda is indicative of the industries development. Policies such as know-your-customer can help to legitimise the market for investors that have previously either been side-lined or wary of joining in.
The US-based exchange, Coinbase is one of the largest in the world with over 20 million members globally. Not only does it operate its own trading platform but it works in conjunction with Wall Street regulators to stay on top of what its customers are up to. Similarly, the Japanese regulators are also becoming more engaged with and accepting of the market as shown by its decision to give licenses to cryptocurrency exchanges, should they satisfy certain requirements. In the US and Japan, brokers are required by law to provide the information of investors to the tax authorities which can lead to a conflict of interest with customers.
Whilst these developments are taking place in the rest of the world, Europe is lagging behind. The CEO of Bitpanda, Eric Demuth said: “We would be happy to have regulations to know where we stand.” Director of the self-regulated cryptocurrency trade group CryptoUK, Iqbal Gandham stated that: “The benefits of regulations are clear. An appropriate framework would serve to both protect consumers, and ensure the longevity and legitimacy of the industry itself.”
Sights set on Malta
Meanwhile, several exchanges such as Binance and OKEx have their sights set on Malta as it prepares to become the first EU jurisdiction to legislate in support of cryptocurrencies, ICOs, and blockchain technology.
Whilst there is concern over the risk of money laundering associated with cryptocurrency, the fact that many industry stakeholders are crying out more regulation and transparency is a good thing. Whilst there are many places in the world where Bitcoin-fuelled luxury or illegal transactions remain largely untraceable, small steps are being taken to change this. The sooner there is a higher level of transparency, the sooner crypto brokers will have more security in the fact that their business is unlikely to be derailed due to a reaction from regulators.
Brokers are not alone in their request for clarity and many have the support of CryptoUK. The group is pushing lawmakers to follow the example of countries such as Japan and to license Bitcoin exchanges that adhere to KYC and AML protocols. CryptoUK also believes that cryptocurrencies should be supervised by the FCA. This comes at the same time as the European Commission and other supervisory authorities are looking t whether the current regulatory framework is suitable for crypto trading.
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