In the past few years, cryptocurrency has taken over our economies and financial systems. Since 2020, records show that crypto’s total market size is close to $1.5 billion. In fact, it’s likely that it will grow three times bigger over the next ten years. Now, the cryptocurrency market cap is getting measured in quadrillions.
While the market is experiencing phenomenal growth, investors’ losses are piling up too. In the spring of 2021, Bitcoin went through a massive devaluation. It ended up wiping huge investment fortunes, say over $14 billion, in a matter of hours. Because of this, billions of dollars in crypto money may end up falling for crypto scams.
This makes it a no-brainer that financial regulators are noticing what’s going on. According to the SEC, the regulations for normal currencies would be used for cryptocurrencies as well. This strict rule is to help prevent money laundering.
In today’s crypto industry, exchanges can be very different from each other. On the big broad edge, you’ll see the reliable, stable, and bigger crypto exchanges. The definition is referring to firms like Coinbase. On the other end of the spectrum, you’ll find new and upcoming platforms. But in the UK, the financial conduct authority is the least bit convinced. When it comes to compliance with anti-money laundering laws, the FHA doesn’t discriminate: it has little confidence in both new and old exchanges. Rather, it believes that exchanges can do more to alleviate fraud and other risks.
In case you’re wondering how anti-money laundering laws came about, here’s how: In the 20th century, countless countries implemented money laundering laws. But very few people saw the need for anti-laundering and anti-terrorism laws before 9/11. After that, they considered it necessary to reduce the channels through which funds can reach international criminal organizations.
The purpose of anti-money laundering laws is to keep illegal funding from coming into the financial system. They apply to exchanges and other financial institutions, such as banks. In the case of banks, it involves regulations that company employees should report suspicious transactions. In addition, they should inform authorities in case they discover opaque funding sources. This is when it’s unclear where the money came from.
Lots of countries rely on criminal anti-money laundering statutes. In principle, these apply in the same way to all people in a jurisdiction. One such firm that has faced bans because of anti-money laundering regulations is Binance. The FCA cornered the world’s biggest crypto exchange. The authority issued warnings to customers. These mentioned various components of the Binance business formation, effectively banning the exchange.
