This increase in the adoption and popularity of cryptocurrencies and the lack of regulations has attracted scammers and fraudsters. From fake initial coin offerings (ICOs) to phishing attacks, these criminals have managed to steal millions of dollars from unsuspecting individuals. In 2017, CoinDash reported that ICO Hack stole funds amounting to $7-10 million from users. In 2021, scammers stole an estimated $14 billion worth of cryptocurrency, as reported by CNBC.
AML Penalties, the flagship product of ZIGRAM, has recorded more than 180 crypto-related incidents resulting in nearly $3 billion in fines and penalties and 11,000 months of imprisonment to more than 350 individuals and organizations since 2020. It has tracked the regulatory landscape and 42 regulations introduced since 2020 with 31 percent and 48 percent of regulations targeting Cryptocurrencies and Virtual Assets respectively. Governments around the world have taken significant steps to mitigate losses from scammers to keep the industry clean for users. Some of the recent developments in this area are:
International Monetary Fund (IMF) and G20 countries are working together to establish a comprehensive policy approach for crypto-assets. Nine key elements, including regulation, legal certainty and international cooperation, aim to balance innovation and risk management.
India has brought cryptocurrencies or virtual assets under the Prevention of Money Laundering Act (PMLA). Indian crypto exchanges will have to report suspicious activities to the Financial Intelligence Unit India (FIU-IND).
In the United States, on August 3, 2022, the Senate Agriculture Committee’s Digital Commodities Consumer Protection Act (DCCPA) was introduced. It mandated crypto firms to protect client assets, eliminate conflicts and disclose the risks of trading in digital commodities. It also gives the Commodity Futures Trading Commission (CFTC) real-time visibility into digital commodity transactions to prevent fraud before it happens and additional authority to regulate the market for non-security crypto-assets.
In Europe, a new regulatory framework for European crypto-assets, the regulation of the markets in crypto-assets (MiCA) was introduced to establish new rules for stablecoins, including Asset-Referenced Tokens (ARTs), E-Money Tokens (EMTs) and utility tokens . It aims to protect investors and ensure financial stability while promoting innovations.
Japan, the first to regulate cryptocurrencies, has established anti-money laundering (AML) standards, enforced by the Japan Financial Intelligence Center (JAFIC), to undertake strict Know-Your-Customer (KYC) checks and detect questionable transactions.
On February 3, 2023, the Australian government published the “Token Mapping Consultation Paper”, in which investments in cryptocurrencies and other digital assets should be included in tax returns and how they fit into existing regulatory frameworks.
As the space continues to expand and become more complex, we may see improved regulations and amendments to these laws.
The balance between regulation and innovation remains a delicate one as policymakers seek to protect investors, prevent illegal activity and promote the growth of this transformative technology. As the regulations continue to update, businesses and private entities will also need to be vigilant, not only for scammers, but also to comply with the changing regulatory structure. This presents an opportunity for a new segment in the market, called Regulatory Technology (RegTech), to emerge as an option for businesses to be stress-free.
“At ZIGRAM, we believe that harnessing the power of crypto-data assets is key to unlocking regulatory clarity and fostering a secure and transparent cryptocurrency ecosystem,” said Abhishek Bali, CEO of ZIGRAM Data Technologies. . “As the crypto industry continues to mature, regulatory clarity becomes increasingly crucial. By establishing comprehensive frameworks that address risks, protect investors and encourage responsible practices, we can unlock the tremendous potential of cryptocurrencies and drive their mainstream adoption,” Bali said.
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