Blockchain technology and cryptocurrencies have several uses in the financial sector. Crypto exchanges, investors, and other companies connected to cryptocurrencies are increasingly under the scrutiny of regulators, enforcement bodies, and tax authorities worldwide. As a result, the possibility of using cryptocurrency for illegal purposes accounts for most of the dangers associated with crypto compliance.

As a result, traders and exchanges must abide by the legal requirements and regulatory frameworks, which are always changing to keep up with business advances. What might potential issues with crypto compliance become important in the future?

The main obstacles to crypto compliance are listed below.

Insufficient Classification

Numerous agencies have developed unique and cutting-edge strategies for handling cryptocurrency legislation. However, the future of crypto compliance requires a unified framework that can assist in resolving the specifics related to various cryptocurrencies around the globe.

Making Bitcoin Look Like Money

Fiat-backed stablecoins may lead to confusion about rules governing cryptocurrencies and fiat money. The emergence of inescapable regulatory measures would also result from the designation of cryptocurrencies as money or as a substitute for conventional fiat currency. As a result, US regulatory authorities have refrained from classifying cryptocurrencies as money.

Focusing on Future Markets

The absence of particular legislation for cryptocurrencies is a significant trend in crypto compliance developments. For instance, US regulators in various states and jurisdictions use the regulations from already-existing legislation governing securities investments to control cryptocurrencies and tokens. However, regulators would need to create entirely new mechanisms to deal with the crypto business, given the scope and speed of change in the area of crypto assets.

Groupings of investors

Different measures have historically been used to categorize investors. US regulators frequently utilize wealth, legal status, and transaction size indicators to categorize investors. On the other hand, the primary market rather than secondary markets has been the scope of this classification. As a result, the usual classification of investors excludes investors who operate with cryptocurrencies.

Blockchain: The future of Crypto Compliance https://t.co/wS7P6ZReux pic.twitter.com/tXSO5yDGVq

— Peter Jonathan Wilcheck (@gowilcheck) July 27, 2022

Dependence on Middlemen

Self-custody cryptocurrency wallets do away with the need for intermediaries—a vital part of securities regulation—for the time being. Without the middleman, wallet users can look for alternative ways to get around the rules that are currently in place.

Criminal Behavior

The largest difficulty in establishing crypto compliance for the future would undoubtedly focus attention on illicit activity. Cryptocurrencies risk tax evasion and money laundering, among other significant criminal acts. It is extremely difficult for regulators to adjust to the changing ways they are utilized for illicit activity.

Future Regulations for Crypto

New regulations for bringing cryptocurrency exchanges under regulatory supervision were most recently announced by the US Securities and Exchange Commission (SEC). The strategy may aid in catching cryptocurrency-related platforms that are not under the regulatory agency’s authority. Given the significance of crypto compliance and the difficulties associated with crypto regulation, compliance will inevitably become a feature of crypto in the future.

However, the list of issues facing future crypto compliance demonstrates the need for a thorough regulatory and compliance structure. The current status of the worldwide compliance framework for cryptocurrencies is disjointed and shattered.

Distinct nations and areas have different regulations governing cryptocurrency. For instance, popular cryptocurrency exchanges have been outright banned in nations like Egypt and China. China recently tightened its restrictions on cryptocurrencies by outlawing all forms of mining and transactions. Many other nations have also made implicit prohibitions against cryptocurrency.

Nearly every exchange in the cryptocurrency industry operates internationally, transcending borders while providing tough problems for regulators and crypto providers. How will this affect the viability of cryptocurrencies in the future? An international regulatory framework that intends to include all authorized crypto service providers has been proposed by the International Monetary Fund. The framework will also consider the cryptocurrency industry’s stringent restrictions and liquidity needs. It’s interesting to note that the IMF’s attempts to create a worldwide standard are one of the good news for future crypto compliance.

Also, read – Regulators in Japan suspends 2 Crypto exchanges for loose compliance

Summing up

With fresh developments being made every day, cryptocurrencies have given rise to an industry that is continually growing and expanding. There is a lot of focus on compliance problems in explaining anticipated future crypto compliance trends. However, as cryptocurrencies have become widely used in digital services and apps, questions have also been raised about crypto compliance’s future and its effects.

What changes may we expect in the future for consumers, exchanges, investors, and other cryptocurrency-related entities? A universal regulatory framework that applies to arbitrarily defined investment groups and crypto assets is necessary for future cryptocurrency compliance. To prepare for the future, find out more about cryptocurrency compliance and the relevant best practices.