The phrase know-your-customer or KYC is often used in all industries with a financial service component. There are many reasons but the main reasons is to ensure safe and clean trading and investing – knowing your customer would ensure that you are not doing business with organized crime or a rogue state, ISIS for example, or perhaps a Mexican cartel.
So this would naturally lead us to cryptocurrencies, as we have said many times on this platform, crypto was like the Wild Wild West when it first became popular and as much as 80 percent of transactions in come coins was for questionable enterprises or transactions. Well, G20 is now said to be preparing to impose stricter KYC policy on exchanges, a move that is getting some pushback from the crypto industry. This is according to an article by Aaron van Wirdum on BitcoinMagazine.com, 13 May.
The G20 is the worlds most powerful 19 countries plus the European Union – a super state – that can sit down and agree on a framework on just about anything. The G20 members have already agreed on an intergovernmental body responsible for setting guidelines to combat money laundering and other financial crime – according to BitcoinMagazine. This of course is for anti-money laundering (AML). The government institution is called the FATF or Financial Action Task Force which does spend a lot of time focusing on money laundering.
There are several bugs to be worked out regarding this system but the fact is that G20 member states will start to flex their muscles in the crypto world in 2019 and 2020.
In our view at Classiarius, we think some strong but limited regulation is necessary. We surely want the market to be free but with far less interest from the black market traders and especially organized crime and drug dealers – this kind of participation could kill crypto, thus preventing it from being widely used by good actors in all markets. More on this topic again next week.