Is the sector prepared for KYC? a nightmare in the making
Is the sector prepared for KYC?
The decentralised sector is slowly taking pace with much of it in a strong performing recovery but with all the strong growth there are creeping regulations in the works. The fall out from the Terra (Luna) Network Collapse has put the wind up regulators who are now ramping up crypto investigations and doubling down on efforts to regulate the sector that is marketed as unregulatable.
Coinbase has come under direct fire as the SEC focuses on it's services stating that Coinbase is offering securities with the companies top lawyer firing back Coinbase does not list securities.
Like a Bank
Although many crypto projects are coming within the scope of the SEC's firing line with many like the former Anchor protocol offering APY of 20% on deposited stable coins operating with all aspects of a bank except without the same oversight.
One of the largest collapses of the sectors life was bound to bring about some change but the question remains how much and what is at stake?
image source The most recent not a financial service but is like a dollar because it's digital value is $US1 is the recent hack on Solana's stable coin Nirvana which wiped 90% of it's total value of $US3.5 Million.
It didn't take long for the once $US1 dollar pegged token to reach the might dust mark of $US0.01c eradicating the token. Solana has been plagued with issues since it's inception so the news isn't too much of a surprise for many in the sector.
Mark Cuban has recently hit out stating that the SEC will develop rules that are “the nightmare that’s waiting for the crypto industry.” and he isn't basing this view solely on a hunch. He provided an example of current challenges that lock out everyday investors and makes it impossible to understand without spending money on a lawyer.
Mark's argument was if the SEC was serious it would make it easier to answer the questions and not a complex confusing environment that forces people to guess the answer rather than understanding and answering correctly.
KYC is coming
Do we know what is on the cards? from whispers around the traps the current focus is on registration of a crypto or service and it will require everyone or thing that issues it to have Know Your Customer (KYC) in place.
What is KYC?
It is effectively the identification of every user and a tracking mechanism to monitor their spending and then if things seem odd reporting them to the relevant government agencies to investigate. The whole premise commenced to battle funding Terrorism, Money Laundering, Cash Economy. This is something Crypto has been free from participating in for a number of years but the pressure is growing.
What happens if KYC can't be or isn't implemented? Well that is an interesting question because what does happen? we can only guess that exchanges will be the governing bodies and peoples ability to "cash out" into fiat would be greatly impacted and limited.
Although with a lot of decentralised exchanges it won't be too long until someone develops a work around.
But one thing is certain, Terra (Luna) Network has given us a nightmare in the making. One we all knew was coming but didn't think would ever happen.
Posted Using LeoFinance Beta
