Cryptocurrency technology is in its budding stages. The BFSI (Banking, Financial Services, and Insurance) sector has started to explore the technology’s potential. Although, there still is a long way to go for organizations to put this technology into practice.
The reasons behind this are that regulations around the technology and its use cases are in the development stage. However, the Government and Central authorities have been contemplating regulations around both KYC and Crypto, till now.
Regulations revolving around Cryptocurrency
As you might be aware, KYC is one of the most important aspects of banking, and there have been quite a few regulations around the practice. Similarly, Cryptocurrency is on its way to becoming inevitable, as organizations are now vying to utilize the technology to garner a competitive edge.
This is the primary reason why governments around the globe, besides watching the growth of Cryptocurrency technology, want to enforce regulations. Now, this can either go in favor or against the development of technology.
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Cryptocurrency- Free Market or Regulation?
Some people view Crypto as not just a tool, but as an interface or utility to either ban or ratify it. Moreover, it is synonymous with the internet. Crypto is vast and an entity unto itself. The lack of centralized control has been worrying central authorities lately.
A lot of people have the perception that a lack of centralized control may lead to heavy risks and instability. Although, you cannot ban technology just like the internet.
Cryptocurrency has the potential to serve both financial and non-financial applications, as the use cases extend across several industries and their applications. At the same time, regulations can lead to an adverse effect on FinTech companies that use this technology.
Localized regulations are capable of leading to an exit from the geographical locations of the organizations, whereas general regulations may render the technology unusable.
In the end, financial institutions will benefit from Crypto technology if they eliminate intermediaries. Hence, they will look forward to implementing it.
Will businesses face losses due to stringent KYC norms?
No, because Crypto intends to ease up the KYC process, moreover, the government has also been keen on setting up regulations in place. In addition to that, Crypto has a form of distributed ledger technology that can make the process even more transparent.
Although, central authorities are figuring out ways they can implement regulations over Cryptocurrency.
Is it possible that regulations can speed up implementation?
It is possible that implementing regulations can speed up the development of this technology, as governments assess the outcome of using Cryptocurrency. The fear regarding it comes from the usage of cryptocurrencies such as Bitcoin. Although, that is a very minor challenge, compared to the benefits that Crypto has to offer.
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