Cryptocurrency regulations aim to create a safe environment for the growing industry. This requires a strong regulatory framework that ensures compliance with anti-money laundering (AML), countering the financing of terrorism (CFT) and know your customer (KYC) standards. It also needs to support blockchain innovation developments and protect consumer safety.
The global nature of cryptocurrencies, which are not tied to any country, makes it challenging to create uniform systems. This makes it hard to establish international cooperation on regulating the crypto market, and encourages shifty operators that operate from poorly regulated areas, interacting with users worldwide.
At the federal level, US regulators struggle with how to approach the regulation of cryptocurrency activities. Currently, the Trump administration takes a hands-off approach to crypto regulation, which may spark innovation, but it also poses significant risks to consumers and financial stability. Congress is looking into new laws to bring more clarity and organization to the industry.
Some countries have progressive policies for regulating the crypto industry, such as Malta, which is a leading blockchain hub. Malta’s Digital Financial Assets Act compels crypto exchanges to get a license from the country’s Department of Financial Protection and Innovation, which sets forth stringent rules for e-money token issuers and stablecoins. It also imposes big penalties for non-compliance. Other governments, such as the UK, require crypto products to be regulated under their existing financial product regulations. This includes a requirement for crypto exchanges to register so that they can comply with AML and CFT requirements, while implementing robust customer identification procedures.