The perceived reluctance by government and regulatory bodies towards cryptocurrencies is largely due to the relative anonymity that surrounds the entire crypto ecosystem among other reasons.
The friction generated by this phenomenon cuts across products and institutional authorities. In some cases, we have seen governments and regulatory bodies ban developments like ICOs due to the absence of regulations and also because of the relative anonymity associated with them.
The possibility of regulation
The fact that cryptocurrencies and KYC/AML procedures can co-exist effectively is a point that is being made clear by the creation of mobile technology supported cryptocurrency, Telcoin.
Telcoin is a cryptocurrency that is distributed by national mobile operators and accepted everywhere. The main focus of this cryptocurrency is to connect with mobile networks globally, enabling easy conversion between telecom mobile money, prepaid credit and postpaid billing platforms.
This platform ensures that each account is tied to a phone number, and the blockchain being an open ledger, the whole system is easier to track for regulators. This solves the anonymity problem that has been a subject of concern for the authorities.
Telcoin incentives structure
The Telcoin partnership with telecom companies comes with an incentivized structure. Telcoin issuance to telcos will occur at a rate of five percent annually for a period of 10 years following the ICO, distributed to GSMA mobile networks continuously based their stage of Telcoin integration. Hence, connecting to Telcoin will make an operator immediately qualify to receive continuous Telcoin issuance. Networks with more Telcoin exchange traffic will receive more.
Leveraging on an existing infrastructure
Due to regulatory pressures by governments and other national agencies, most exchanges now require a traditional bank account and a cumbersome “know your customer” (KYC) authorization before allowing the purchase of any cryptocurrency. This is a major drawback for companies working on the blockchain trying to address financial inclusion in developing countries. By going with a telecom-distributed cryptocurrency, a certain amount of compliance is already in place. Therefore, Telcoin will leverage existing telecoms KYC in place for mobile money access and work with the telecoms to meet standards required for cryptocurrency.
The borderless nature of cryptocurrencies is now placing increasing pressure on regulators. Monetary policy remains a national security priority, and banks a powerful lobby, but a wave of interest in the future of cryptocurrencies is turning the tide. Around the world, governments are starting to accept cryptocurrencies, as the need to regulate them as a taxable asset is rapidly outweighing any threat to monetary policy.
Hence, the innovation being introduced by Telcoin stands as a bridge between the authorities and the emerging technology of cryptocurrencies. The seamless adoption of existing KYC/AML procedures automatically eliminates that fears of using these cryptocurrencies for dishonest and anti-people activities.