Regulators around the globe are reconsidering the blockchain & cryptocurrency regulations as this technology faces growth in multiple industries.
Over the last couple of years, an obscure technology, blockchain, formerly related to virtual money has gained global acclaim. No longer recognized Bitcoin, it is now extended to practically every business. Regulators around the globe are reconsidering the scope of KYC and AML regulations due to the large adoption of this technology in multiple industries.
Currently, there is no uniformity in global crypto and blockchain regulations. While blockchain has played a significant role in society, it persists as a comparatively nascent technology, having survived for shorter than ten years. This brief history has created pressure when the technology has been extended in fields traditionally subjected to comprehensive regulation, such as capital-raising and money transmission.
UK Cryptocurrency and Blockchain Regulation
The United Kingdom’s strategy to cryptocurrency laws is evolving but currently, there is no particular legalization. Cryptocurrencies are not regarded as authorized tender and transfers have certification specifications. HM Revenue and Customs (HMRC) has declared a brief on the tax strategy of cryptocurrencies, declaring that their “unique identity” implies they can’t be associated with traditional expenses or installments, and their “taxability” depends on the actions and individuals involved. Profits on cryptocurrencies are subject to monetary gains tax.
Cryptocurrency exchanges in the United Kingdom usually need to enroll with the Financial Conduct Authority (FCA) although some crypto companies may be responsible to acquire an e-license, instead. Although it doesn’t offer unique procurements for transfers, the FCA administration emphasizes that businesses involved in crypto-related actions that fall under subsisting monetary laws for derivatives require verification of actions. This is why it is recommended that crypto businesses should adopt Know Your Customer to make secure and seamless transactions.
Though it is essential to remark that despite an assigned cryptocurrency is not a specified investment other than electronic funds. Specific activities in association with such cryptocurrencies can yet be subjected to UK financial regulation. Indeed, such derivatives are also subject to recommended FCA limitations on their trade, purchasing, and distribution to retail clients. Furthermore, money transmission laws and anti-money laundering legislation may also be applied to activities carried out in connection to unregulated cryptocurrencies.
With a blockchain, the credit transaction and relevant records could be digitally engaged and distributed electronically at closing, thus providing the deal sessions, including data about loan forms, automatically to populate on the system ledger. The corresponding ledger obtained by all bankers. A blockchain platform for an associated loan could also attempt a loan’s credit rate, credit, and capital installment terms, and any other data fields related to the growth period of the loan. A blockchain platform could significantly decrease the time spent on synchronizing data over the market.
UK AML Requirements
AML requirements are generally included in the money laundering, terrorist financing, and transfer of funds. The MLRs perform the Fourth EU Money Laundering Directive in the United Kingdom and implement several obligations on companies that are within their extent, including the obligation to conduct a business level AML risk assessment. The MLRs are implemented on businesses that have been recognized as the most vulnerable to being utilized for money laundering or terrorist financing. Generally expressing, this indicates that providers of merchandise and services associated with unregulated cryptocurrencies are not directly subjected to the MLRs implemented.
It All Narrows Down To…
Cryptocurrency is likely to be a broadly used means of transactions in the future. However, the increasing number of fraudulent actions, such as money laundering and terrorist financing is becoming a barrier. To fight these violations, FATF has implemented regulations on all digital currency transactions. The latest directive is more strict when it occurs to financial crimes in cryptocurrencies. The fines have developed and KYC/AML checks should be more robust. Hence, Anti Money Laundering screening is necessary for crypto businesses.
Edward is a cryptocurrency pioneer, writing as an author on different platforms including Medium and Thrive Global. He always likes to write on cryptocurrency which is a growing global market.