Regulation

Duane Morris LLP – Banks on Regulatory Pause from Engaging in Cryptocurrency Activities

Published

4 months ago

23 July, 2024

Duane Morris LLP - Banks on Regulatory Pause from Engaging in Cryptocurrency Activities

Early guidance from the OCC indicated a generally permissive approach, subject to prudent risk and operational management.

In our recent Alert, we discussed the limitations that Securities and Exchange Commission (SEC) Staff Accounting Bulletin No. 121 puts on banks that want to offer crypto custody services to their customers. SAB 121 is not the only regulation that could give pause to banks in engaging in cryptocurrency activities. The Office of the Comptroller of the Currency (OCC), the Federal Reserve Board (FRB) and the Federal Deposit Insurance Corporation (FDIC) regulate and supervise banks more directly. This Alert will discuss the rules and supervisory guidance that these agencies have provided to banks relating to cryptocurrency and how the guidance has evolved over the past several years.

Early OCC Guidance

Early guidance from the OCC indicated a generally permissive approach, subject to prudent risk and operational management.

On July 22, 2020, the OCC issued Interpretive Letter #1170 addressing whether a national bank may expand its existing custody services to include crypto custody. Citing the growing demand by customers to limit financial risk by having secure places to hold their cryptographic keys and manage their crypto assets, and the evolving technological nature of providing payment, deposit and loan services to enable an efficient flow of funds in the U.S. economy, the OCC stated that crypto custody is “a modern form of these traditional bank activities” that is permissible in both nonfiduciary and fiduciary capacities. As with other banking activities, a bank should employ sound risk management practices and have “adequate systems in place to identify, measure, monitor and control the risks of its custody services.”

In connection with the issuance of stablecoins that are held in hosted wallets and backed on a one-for-one basis by a single traditional currency such as U.S. dollars, the issuer may want to hold the traditional currency in a reserve account at a bank. To enable the issuer to provide comfort as to the stability of the stablecoin, the bank would monitor the account balance on a daily basis to confirm that the reserve equals or exceeds the number of issued stablecoins. Similar to crypto custody, the OCC determined in Interpretive Letter #1172 that such banking activities are natural extensions of traditional banking activities. Subject to developing sound risk management practices, particularly relating to liquidity risk, and complying with all applicable laws, including the USA Patriot Act, the Bank Secrecy Act and anti-money laundering regulations, such activities are permitted under the letter.

On January 4, 2021, the OCC addressed the use by regulated banks of distributed ledgers and stablecoins to facilitate payment services. Compared to traditional wire transfers of funds, converting the money into a stablecoin and sending it from one wallet to another can be cheaper, faster and more efficient, especially in international transactions. Interpretive Letter #1174 permitted such activities but highlighted the heightened fraud and operational risks inherent in money transfers.

Early FDIC Initiatives

Around the same time, the FDIC was reportedly working on a three-part plan to provide guidance on (1) the way in which cryptocurrency assets are subject to the existing rules of the FDIC, (2) the extent to which banks can engage in cryptocurrency activities, and (3) the expectations of the FDIC in supervising such activities. This is a top-down approach under which crypto activities generally can be permissible as long as they fit within the existing regulatory framework.

Another area of concern to the FDIC was the challenges that cryptocurrency activities can pose in the case of a failing or failed institution (FFI). According to the FDIC Office of the Inspector General, the Division of Resolutions and Receiverships began developing a readiness and response plan for five potential use situations in January 2021:

Holding and ownership of crypto by an FFI;
Holding crypto as collateral for a loan;
Holding custody of crypto for customers;
Creation of a stablecoin by an FFI on a blockchain; and
A payment system accessible by multiple banks.

The first part of this plan was completed in December 2022.

Agency Coordination Leads to Stricter Guidance

During this two-year period, as the agencies started to develop their approach toward cryptocurrencies, they began to coordinate their efforts. Gradually, they expressed concerns over the risks related to crypto and tightened their guidance.

On November 23, 2021, the FRB, the FDIC and the OCC issued a brief, two-page joint statement to outline the coordinated “policy sprints” that they conducted to get up to speed on cryptocurrencies, the potential use cases for banks (substantially similar to the ones described above) and the key risks posed by such activities. Importantly, they announced in general terms that they planned to provide clearer guidance to banks in the following year. In addition, they indicated that they would “evaluate the application of bank capital and liquidity standards to crypto-assets.” As noted in our prior Alert, the imposition of capital requirements can have a significant impact on the viability of proposed banking activities.

On the same day as this relatively innocuous statement, the OCC issued a press release publishing Interpretive Letter #1179 clarifying its guidance in Interpretive Letters #1170, #1172 and #1174. In short, the press release stated that a bank may engage in the specified activities “after [it] notifies its supervisory office of its intent to engage in the activities, and after a bank receives written notification of the supervisory office’s non-objection.” In case that wasn’t clear enough, the next sentence repeated that “[t]he bank should not engage in the activity until it receives a non-objection from its supervisory office.” This is pointedly more restrictive than the permissive language of the original interpretive letters. Commenting on the new letter, then acting Comptroller of the Currency Michael J. Hsu stated, “Today’s letter reaffirms the primacy of safety and soundness.” He further cited the novel risks posed by cryptocurrencies and stated that “banks must be able to demonstrate that they have appropriate risk management systems and controls in place.”

In March 2022, the FDIC formed a Crypto Asset Risks Interdivisional Working Group. This group changed the FDIC’s approach from the one described above to a “bottom-up” approach to supervising banks focusing on (1) understanding the crypto activities of banks, (2) providing case specific feedback and (3) coordinating with other regulators to provide broader guidance to the finance industry. Rather than building a general framework under which various and developing activities may be permitted, this is more restrictive, similar to the updated OCC guidance―i.e., let us know what you want to do and we’ll let you know if you can do it.

On April 7, 2022, the FDIC sent a publicly available Financial Institution Letter to supervised institutions instructing them to notify the FDIC if they “intend to engage in, or… are currently engaged in, any activities involving or related to crypto assets.” The letter stated that based on the information provided, the FDIC will provide “relevant supervisory feedback.”

This letter appears to be softer in tone than the OCC letter in that it contemplates that banks may already be engaged in crypto activities. However, the FDIC reportedly paired this letter with private, direct supervisory letters to numerous financial institutions requesting that they “pause, or not expand, planned or ongoing crypto-related activities” so that the FDIC can evaluate the financial stability, safety and soundness, and consumer protection ramifications and consider the appropriate supervisory feedback. The FDIC has not publicly disclosed how many such pause letters were sent, but the FDIC’s Office of Inspector General reported that as of January 2023, at least 96 institutions notified the FDIC of proposed or active crypto-related activities.

To round out the coordinated agency approach, on August 16, 2022, the Division of Supervision and Regulation and the Division of Community Affairs of the FRB issued supervision and regulation letter SR 22-6/CA 22-6. Similar to the OCC and FDIC letters, the letter requires all supervised banks, including banks with less than $10 billion in assets, to notify its supervisory contact if it engages or plans to engage in activities related to crypto. Although the letter does not directly request that banks pause such activities, it achieves the same effect by noting that a bank must make sure that the activity is “legally permissible” and evaluate whether it has to make any filings under applicable laws, including the Federal Deposit Insurance Act and related regulations. The letter came out later than the other agency letters and displays a more comprehensive understanding of the challenges in engaging in crypto asset activities. It contains a litany of operational, risk management and regulatory considerations to address before engaging in such activities. In case a bank is subject to state regulation, the letter encourages banks to provide similar notifications to applicable state banking regulators.

Following these individual actions, the three agencies issued two more joint statements in early 2023. On January 3, 2023, the agencies set forth a detailed list of risks that banks face when engaging in crypto activities, including fraud, illicit activities, cyberattacks, outages, volatility, legal uncertainties, inadequate disclosures, governance and processes by crypto companies and risk of contagion due to the concentrated, interconnected nature of some crypto firms. The goal of the agencies in their case-by-case review of crypto activities by banks is to mitigate the risks that can be mitigated and to insulate the banking system from the risks that cannot. Although they stated in broad terms that banks “are neither prohibited nor discouraged from providing banking services to customers of any specific class or type,” they expressed their belief that “issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.”

On February 23, 2023, the agencies issued a more focused statement relating to liquidity risks when a crypto firm (such as a cryptocurrency exchange or stablecoin issuer) maintains bank deposits for the benefit of its customers. Although the crypto firm itself may be stable, there could be a run on the bank if the crypto market undergoes stress or volatility that causes the crypto firm’s customers to withdraw funds. This statement was different from the others in that it went on to provide some banking practices that might be effective to address the potential risks, including obtaining a greater understanding of the market behaviors that can drive such actions, evaluating the interconnected nature of various crypto assets that can lead to a concentrated withdrawal of funds, taking such liquidity risks into account when modeling stress tests and liquidity reserves, and establishing procedures for robust monitoring and due diligence of such risks.

A Lesson in Volatility from Bitcoin

To provide some context to the growing caution of the agencies, it is instructive to look at the price of Bitcoin during this period. At the beginning of 2020, Bitcoin traded around $7,000. Then the COVID-19 pandemic happened, and investors sought alternative investments to hedge against a collapsing global economy. By the end of December 2020, the price of Bitcoin had climbed to almost $29,000. In April 2021, the Coinbase cryptocurrency exchange went public, and the price of Bitcoin was almost $65,000. Bitcoin became increasingly volatile after that, dropping more than half to roughly $31,000 three months later, then bouncing higher to about $53,000 in September, then down again to about $41,000 a few week later. By early November 2021, Bitcoin rallied to a new all-time high around $69,000, only to end the year around $46,000. By May 2022, the price was down to about $29,000. In November 2022, the widely used FTX cryptocurrency exchange collapsed due to fraud, mismanagement and thousands of customer withdrawals. The price of Bitcoin bottomed out close to $15,000.

OIG Report

Given the background above, warnings of contagion are not so far-fetched, and ring fencing the banking system from cryptocurrency risks seems sensible. Enforcing a pause in banks engaging in such activities is one way to minimize such risks. The difficulty with this approach is that it can stagnate. Other than general considerations and the limited banking practices described in the February 2023 joint statement, the agencies have not published detailed guidance for engaging in cryptocurrency activities. As the agencies have recognized, there can be significant benefits to the market and its participants from bank involvement with crypto. The few banks that started such activities prior to the pause are already exposed to such risks. The lack of clear guidance can deprive them of the tools they need to limit risks and undermine the FDIC’s mission to stabilize the financial system.

The FDIC Office of Inspector General made this point in its evaluation report of October 2023. Moreover, the report indicated that the FDIC started to develop and implement strategies to address crypto risks, but cited its failure to complete a comprehensive risk assessment to determine if such risks can be addressed through actions such as supervision of banks. Although the public version of the report is redacted, it appears that the FDIC provided supervisory feedback only to a limited number of banks. According to the OIG, the FDIC did not say in the pause letters when it would review information provided by banks, when it would respond with guidance or when the process would be over. Based on its review, the OIG recommended that the FDIC (1) implement a timetable to finish its risk assessment and (2) communicate clearly its expected process with supervised banks, including a clear end point. The FDIC agreed with the recommendations and undertook to address them by January 30, 2024. Case closed.

Not quite. In Section 7 of its annual Risk Review published on May 22, 2024, the FDIC discussed its approach to cryptocurrency risks. The section is barely more than a page in length and mostly refers to the statements from 2022 and 2023 described above. There are no references to new guidance or statements. The section does refer generally to the supervisory feedback provided directly to specific institutions in 2023. It’s possible that the FDIC’s thinking and guidance have evolved and become more detailed, but it does not appear that the FDIC (or the FRB or OCC) has issued any new guidance for public consideration by banks, cryptocurrency companies or other financial market participants.

Coinbase FOIA Request

This omission has not gone unnoticed. On June 27, 2024, History Associates Incorporated, on behalf of Coinbase Inc., sued the FDIC in federal court to compel the FDIC to comply with its previous request under the Freedom of Information Act for copies of the pause letters that it issued to banks. History Associates Incorporated v. Federal Deposit Insurance Corporation, Case No. 1:24-cv-01857 (D.D.C.). History Associates made the initial request about a month after the OIG report came out. After several denials and appeals in early 2024, the FDIC ultimately decided on May 8, 2024, that the letters were confidential communications as part of its supervision of individual banks. History Associates maintained that the letters were form letters that could be redacted to address confidentiality concerns, but to no avail.

As of now, that is where things stand. Other than a few banks that are engaged in limited, legacy cryptocurrency activities, banks are generally on an indefinite pause, even if they are not expressly prohibited from doing otherwise. If the agencies have provided specific guidance to individual banks, it does not appear that such guidance has resulted in banks expanding or initiating significant new cryptocurrency activities. It remains to be seen how long this pause will last.

For More Information

If you have any questions about this Alert, please contact Roger S. Chari, any of the attorneys in our Banking and Finance Industry Group, any of the attorneys in our Financial Technology Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm’s full disclaimer.

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Regulation

Cryptocurrency Regulation in Slovenia 2024

Published

4 months ago

1 August, 2024

Chain Feed Staff

Cryptocurrency Regulation in Slovenia 2024

Slovenia, a small but highly developed European country with a population of 2.1 million, boasts a rich industrial history that has contributed significantly to its robust economy. As the most economically developed Slavic nation, Slovenia has grown steadily since adopting the euro in 2007. Its openness to innovation has been a key factor in its success in the industrial sector, making it a favorite destination for cryptocurrency enthusiasts. Many believe that Slovenia is poised to become a powerful fintech hub in Europe. But does its current cryptocurrency regulatory framework support such aspirations?

Let’s explore Slovenia’s cryptocurrency regulations and see if they can push the country to the forefront of the cryptocurrency scene. My expectations are positive. What are yours? Before we answer, let’s dig deeper.

1. Cryptocurrency Regulation in Slovenia: An Overview

Slovenia is known for its pro-innovation stance, providing a supportive environment for emerging technologies such as blockchain and cryptocurrencies. Under the Payment Services and Systems Act, cryptocurrencies are classified as virtual assets rather than financial or monetary instruments.

Regulation of the cryptocurrency sector in Slovenia is decentralized. Different authorities manage different aspects of the ecosystem. For example, the Bank of Slovenia and the Securities Market Agency supervise cryptocurrency transactions to ensure compliance with financial laws, including anti-money laundering (AML) and counter-terrorist financing regulations. The Slovenian Act on the Prevention of Money Laundering and Terrorist Financing (ZPPDFT-2) incorporates the EU’s Fifth Anti-Money Laundering Directive (5MLD) and aligns with the latest FATF recommendations. All virtual currency service providers must register with the Office of the Republic of Slovenia.

2. Cryptocurrency regulation in Slovenia: what’s new?

This year, there have been several noteworthy developments in the cryptocurrency sector in Slovenia:

July 25, 2024: Slovenia has issued a €30 million on-chain sovereign digital bond, the first of its kind in the EU, with a yield of 3.65%, maturing on 25 November 2024.

May 14, 2024: NiceHash has announced the first Slovenian Bitcoin-focused conference, NiceHashX, scheduled for November 8-9 in Maribor.

3. Explanation of the legal framework for cryptocurrency taxation in Slovenia

Slovenia’s cryptocurrency tax framework provides clear guidelines for both individuals and businesses. According to the Slovenian Tax Administration, tax treatment depends on the status of the trader and the nature of the transaction.

Individuals: Income earned from cryptocurrencies through employment or ongoing business activities is subject to personal income tax. However, capital gains from trading or market fluctuations are exempt from taxation.
Society: Capital gains from cryptocurrency activities are subject to a corporate income tax of 19%. Value added tax (VAT) generally applies at a rate of 22%, although cryptocurrency transactions considered as means of payment are exempt from VAT. Companies are not allowed to limit payment methods to cryptocurrencies only. Tokens issued during ICOs must comply with standard accounting rules and the Corporate Tax Act.

4. Cryptocurrency Mining in Slovenia: What You Should Know

Cryptocurrency mining is not restricted in Slovenia, but the income from mining is considered business income and is therefore taxable. This includes rewards from validating transactions and any additional income from mining operations. Both natural persons and legal entities must comply with Slovenian tax regulations.

5. Timeline of the evolution of cryptocurrency regulations in Slovenia

Here is a timeline highlighting the evolution of cryptocurrency regulations in Slovenia:

2013:The Slovenian Tax Administration has issued guidelines according to which income from cryptocurrency transactions should be taxed.
2017:The Slovenian Tax Administration has provided more detailed guidelines on cryptocurrency taxation, based on factors such as the trader’s status and the type of transaction.
2023The EU has adopted the Markets in Cryptocurrencies Regulation (MiCA), which establishes a uniform regulatory framework for cryptocurrencies, their issuers and service providers across the EU.

Final note

Slovenia’s approach to the cryptocurrency industry is commendable, reflecting its optimistic view of the future of cryptocurrency. The country’s balanced regulatory framework supports cryptocurrency innovation while protecting user rights and preventing illegal activities. Recent developments demonstrate Slovenia’s commitment to continuously improving its regulatory environment. Slovenia’s cryptocurrency regulatory framework sets a positive example for other nations navigating the evolving cryptocurrency landscape.

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Regulation

A Blank Slate for Cryptocurrencies: Kamala Harris’ Regulatory Opportunity

Published

4 months ago

1 August, 2024

Chain Feed Staff

A Blank Slate for Cryptocurrencies: Kamala Harris' Regulatory Opportunity

Photo by The Dhage of Shubham ON Disinfect

As the cryptocurrency landscape continues to evolve, the need for clear regulation has never been greater.

Vice President Kamala Harris is now leading the charge on digital asset regulation in the United States, presenting a unique opportunity for a clean slate. This fresh start can foster innovation and protect consumers. It can also pave the way for widespread adoption across industries, including real estate agencies, healthcare providers, and online gambling platforms like these online casinos in the uk. According to experts at SafestCasinoSites, these platforms have advantages such as bonus offers, a wide selection of games, and various payment methods. Ultimately, all this increased adoption could push the cryptocurrency market forward.

With that in mind, let’s take a look at the current state of cryptocurrency regulation in the United States, which is a complex and confusing landscape. Multiple agencies, including the Securities and Exchange Commission (SEC), the Commodity Futures Trading Commission (CFTC), and the Financial Crimes Enforcement Network (FinCEN), have overlapping jurisdictions, creating a fragmented regulatory environment. This lack of clarity has hindered innovation, as companies are reluctant to invest in the United States, fearing regulatory repercussions. A cohesive and clear regulatory framework is urgently needed to unlock the full potential of cryptocurrencies in the United States.

While the US struggles to find its footing, other countries, such as Singapore and the UK, are actively embracing the cryptocurrency industry with clear and supportive regulatory frameworks. This has led to a brain drain, with companies opting to set up in more hospitable environments.

Vice President Kamala Harris has a unique opportunity to change this narrative and clean up the future. cryptocurrency regulation. By taking a comprehensive and inclusive approach, it can help create a framework that balances consumer protection with innovation and growth. The time has come for clear and effective regulation of cryptocurrencies in the United States.

Effective regulation of digital assets is essential to fostering a safe and innovative environment. Key principles guiding this regulation include clarity, innovation, global cooperation, consumer protection, and flexibility. Clear definitions and guidelines eliminate ambiguity, while encouraging experimentation and development to ensure progress. Collaboration with international partners establishes consistent standards, preventing regulatory arbitrage. Strong safeguards protect consumers from fraud and market abuse, and adaptability allows for evolution in response to emerging trends and technologies, striking a balance between innovation and protection.

The benefits of effective cryptocurrency regulation are many and far-reaching. By establishing clear guidelines, governments can attract investors and traditional users, spurring growth and adoption. This, in turn, can position countries like the United States as global leaders in financial technology and innovation. Strong protections will also increase consumer confidence in digital assets and related products, boosting economic activity.

A thriving cryptocurrency industry can significantly contribute to GDP and job creation, which has a positive impact on the overall economy. Furthermore, effective regulation has paved the way for the growth of many companies such as tech startups, online casinos, and pharmaceutical companies, proving that clear guidelines can unlock new opportunities without stifling innovation. This is a great example of how regulation can alleviate fears of regressive policies, even if Kamala Harris does not repeal the current progressive approach. By adopting effective regulation, governments can create fertile ground for the cryptocurrency industry to thrive, driving progress and prosperity.

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Regulation

Think You Own Your Crypto? New UK Law Would Ensure It – DL News

Published

4 months ago

1 August, 2024

Chain Feed Staff

Think You Own Your Crypto? New UK Law Would Ensure It – DL News

The UK Law Commission has developed a bill that will address a situation of legal uncertainty.
The commission’s goal is to ensure that cryptocurrencies are legally treated as personal property.

UK law is not entirely clear whether cryptocurrencies can be considered personal property.

This is according to the UK Law Commission, which argues that while most investors assume that when they buy cryptocurrencies, they are “acquiring property rights in the same way as buying, say, a watch or a laptop.”

“As the law currently stands, this is not necessarily the case,” the respected legal body said in a new report on Tuesday.

The report was accompanied by a solution: a new bill to consolidate the legal status of digital assets as personal property.

This could be huge for the estimated 4.7 million Britons valued hold cryptocurrencies.

“This will allow the courts to determine a range of issues,” the report says.

If passed, the law would help clarify how cryptocurrencies are treated in cases of bankruptcy, estate planning or theft.

Flexible law

The commission is an independent body responsible for reviewing UK law. It began investigating whether English and Welsh property laws apply to digital assets in 2020.

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At the time, then-Chancellor of the Exchequer Rishi Sunak expressed ambitions to transform the UK into a cryptocurrency hub as Britons invested more.

In 2023, the commission decided that, in most cases, the legislation of England and Wales is sufficiently flexible to regulate cryptocurrencies.

This means that any asset, from Bitcoin to non-fungible tokens and some types of digital contracts, can be considered personal property, without Parliament having to write extensive new laws.

There was one small area of uncertainty, however: it was unclear whether cryptocurrencies fell within the two categories of personal property recognised under UK law.

These two categories are made up of tangible assets (cars, laptops, bags) and intangible assets (contracts, stocks, and debt).

The bill that will now go to Parliament to be converted into law aims to remedy this situation.

Without that clarification, courts may try to lump cryptocurrencies together with intangible assets, said Adam Sanitt, head of litigation, knowledge, innovation and corporate support EMEA at law firm Norton Rose Fulbright. DL News in March.

This is problematic because intangible assets are creations of the legal system, while cryptocurrencies are not.

“How the law treats digital assets, what rights you have over them, how you own them, how you transfer them to other people—that treatment is different, because digital assets don’t exist by virtue of the legal system, but independently of it,” Sanitt said.

The money in your bank account, for example, is a legal creation. The government could pass a law to cancel it.

However, if the UK passed a law banning Bitcoin, Bitcoin would not cease to exist.

Sanitt said: “That’s why digital assets are so important: neither the government nor the legal system can take them away from you.”

Contact the author at joanna@dlnews.com.

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Regulation

The Solution the Cryptocurrency Industry Needs

Published

4 months ago

1 August, 2024

Chain Feed Staff

The Solution the Cryptocurrency Industry Needs

The cryptocurrency industry has performed remarkably well since its inception, but now faces a critical hurdle that requires careful consideration and regulatory expertise to overcome. Despite the industry’s rapid growth and rate of global adoption, the gap between the industry and global regulation is only widening as new innovations break through into the public domain.

Although efforts are being made on both sides, regulators’ lack of familiarity with cryptocurrencies and the industry’s lack of regulatory expertise are hindering innovation in the sector. To address this issue, traditional financial institutions (TradFi) such as MultiBank Group have started venturing into the cryptocurrency sector.

The regulatory gap

Over the past decade, the cryptocurrency industry has grown dramatically as tech entrepreneurs and forward-thinking thinkers have founded a plethora of crypto platforms and protocols to push the boundaries of the space. The problem faced by these newcomers, who are often unfamiliar with the hurdles posed by financial regulators, can quickly overwhelm and stall operations.

On the other hand, regulators more attuned to TradFi systems may be equally stifled by the complexities of decentralization and blockchain technology. The unfamiliarity experienced by both innovators and regulators creates a stark regulatory divide between both sides, leading to misunderstandings and potential conflicts.

To overcome this lack of communication, a bridge must be built to bridge the gap, ensuring future stability for the cryptocurrency industry and clearer legislation from regulators.

Efforts to bridge the gap between industry

The gap between the cryptocurrency industry and regulators is slowly narrowing as efforts to regulate cryptocurrencies and Web3 space activities are gaining momentum. Specific regulatory actions are taking place in many countries, aimed at providing greater oversight of cryptocurrency transactions, cryptocurrency exchanges, and initial coin offerings (ICOs).

Despite being a positive step in the right direction, these new regulations can differ significantly between jurisdictions around the world. This fragmentation results in a regulatory environment filled with obstacles, bottlenecks, and varying requirements and prohibitions. As cryptocurrency companies and TradFi institutions attempt to navigate the minefield, the regulatory maze becomes increasingly convoluted.

TradFi institutions like MultiBank Group are working to solve this problem, as one of the largest financial derivatives institutions in the world with over 12 licenses across all continents. Founded in 2005, the Group has an impeccable and trustworthy reputation globally, extensive expertise in financial regulation and has now ventured into the cryptocurrency space via MultiBank.io.

MultiBank.io: TradFi Excellence in the Crypto Space

Expanding into the cryptocurrency space via MultiBank.io has enabled MultiBank Group to provide regulatory clarity and trust to the digital asset industry. With a substantial daily trading volume of $12.1 billion, the timely decision to enter the cryptocurrency space has the potential to set regulatory precedents and standards for years to come.

By helping to develop sensible and well-considered regulations, MultiBank.io’s established reputation allows the company to communicate effectively and clearly with regulators. Unlike others in the industry without regulatory expertise, MultiBank.io facilitates the Group’s commitment to rigorous regulatory standards, the scope of oversight and establishes the necessary transparency.

The company’s approach ensures that regulatory licenses are pre-acquired, compliance is met globally without jurisdictional barriers, and transactions remain secure at all times. By helping to create robust regulations that are both clear and innovation-friendly, MultiBank Group looks forward to standardizing the entire cryptocurrency industry for other potential innovators.

One of the biggest challenges in establishing a clearly constructed bridge between regulators and the cryptocurrency industry is effective communication. By leveraging its institutional background TradFi and acting as an intermediary with regulators, MultiBank Group is able to translate the needs of the industry to those who shape it.

This quality of mediation is essential to ensure that regulation helps develop essential technological advances rather than hinders their establishment and growth. Through the lens of TradFi when looking at the complexity of the cryptocurrency industry, MultiBank Group is able to deconstruct unfamiliar crypto arguments for regulation and create a safer and more secure space.

Where TradFi and Crypto Meet

Regulations are crucial for traders, investors, and everyday users of crypto platforms and their safety when participating in crypto markets. While strict regulations are necessary for stable market integrity, innovation should still be considered, something MultiBank Group considers a priority.

Where TradFi and cryptocurrencies converge, the Group is there to provide a balanced approach to ensure promotion for both the cryptocurrency industry and regulators seeking to protect both retail and institutional investors. This balance is critical to maintaining a thriving space where cryptocurrency innovation can thrive without compromising the security of user funds or data.

As more TradFi institutions like MultiBank Group enter the cryptocurrency space with ever-expanding expertise in regulatory understanding, the future of the industry is increasingly encouraged. The financial freedoms of the cryptocurrency space coupled with regulatory oversight for financial security will be the guiding lights for the future success of the entire cryptocurrency industry.

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