The world has seen a significant change in finance as cryptocurrencies are now used daily. Cryptocurrency exchanges started with the intention to allow users who disdain government-issued currency or traditional banks access.
But over time, they have become some of if not the most important marketplaces for trading assets within this new digital age we live in today; where everything – from stocks and bonds all along property titles can be bought/sold virtually anywhere around planet Earth 24 hours per day seven days per week through something called “blockchain.”
The blockchain trend began when Bitcoin (BTC) first emerged almost ten years ago. Today we will go in-depth about the ever-changing growth and evolution of Cryptocurrency.
What Has Changed?
Crypto assets have been on the outer edge of the perimeter of regulations, but they’re increasingly facing pressure to be included within it. The first key step in this direction was announced at an international level regarding AML standards when the Financial Action Task Force extended its list for crypto-related businesses in June 2019 and applied them across their agencies – including anti-money laundering policies (AML).
Many reputable crypto platforms and apps such as Binance, Bitcoin Up, and E-toro have precautions to ensure users’ money stays on the safe side.
The European Union has always been a leader in financial regulations. For firms to operate in this area, there are now two major obligations that need fulfilling- one being anti-money laundering laws and the other taking care of customer due diligence.
To date, the regulatory treatment of crypto assets has been more complicated at an EU-wide level. This is due to how they are currently being treated under existing regulations, and not enough time or funds have been allocated for specific rules relating specifically to cryptocurrencies like Bitcoin – which could include things such as outlawed sale techniques if sold without adequate protection measures in place.
It would likely harm consumers who purchased these products, thinking they were in a safe haven of investments but also deterring entrepreneurs from developing new blockchain technologies.
A General Attitude Towards It
The Financial Conduct Authority (FCA) has given regulators the power to regulate cryptocurrency in much of its current form. As a result, two main categories have been brought under existing rules: digital assets akin to “financial instruments” and tokens functioning as ‘electronic money’ generally capturing a crypto-based means for raising finance or any stablecoins that exist today.
Security tokens are a novel form of digital security representing some or all assets in an underlying instrument, such as Bitcoin (BTC) for cryptocurrency trading platforms. To provide regulatory clarity on how national markets and athletes should treat these instruments, Europe has created new laws requiring crypto exchanges operating within its boundaries to obtain authorization from local regulators and the European Central Bank (ECB).
About Digital Security
In the ever-changing world of finance, major steps are being made to develop a credible digital market infrastructure for the issuance and trading of Securities Digital Assets. Most notably, UBS has recently received permission from Britain’s Financial Conduct Authority (FCA), allowing it to become one of only a few venues that can handle these newfangled financial products called “digital securities.” These exchanges will allow investors both domestically and internationally access through different channels like online banking or mobile apps, which could make investing more accessible than ever before.
Integrating digital solutions with existing market infrastructures has been challenging due to constraints stemming from rules around settlement finality requirements in post-trading systems.
The European Commission has recently published a proposed regulation for market infrastructures based on blockchain technology, designed specifically to encourage innovation through DLT. The aim is not just about providing trading platforms but also security services like clearinghouses or originators of digital securities transactions in post-trade scenarios.
What Does This All Mean for The System?
European banks want to bring their expertise in managing money and securing digital assets into the crypto world. With FCA approval, they’re working on a custody solution to provide secure storage for cryptocurrencies like ING does now within its traditional banking system. The U.S., one of the last holdouts for cryptocurrency custody services, is now accepting cryptocurrencies as collateral to be used on behalf of financial institutions and trading platforms that offer banking-like features through crypto asset service providers.
As crypto exchanges continue to innovate and expand access, they will be joined by improved financial regulatory recognition of their services. This will likely bring about significant changes in the space as companies on fiat currency systems start using digital assets like Bitcoin or Ethereum (ETH) for trading purposes, alongside traditional stocks. This brings us one step closer to mass adoption.
The idea that a virtual currency can be produced by anyone and is not controlled by any single entity may have economists racking their brains. Some say it will fail because the price to produce bitcoin clones seems like zero, but others think this new form could also revolutionize how we store value. The current changes never stop here, and everyone is always looking for what will come next in our world.