Crypto-enthusiasts aim to escape central banks and fiat currencies, not to learn that all the cryptocurrency companies they support will eventually be evened out with banks thanks to the strict regulations.
The European Central Bank (ECB) has stated the need to strengthen controls on the crypto industry, stressing its volatility and the associated criminal activity.
In January of this year, ECB President Christine Lagarde called Bitcoin an “extremely speculative asset.” According to her, “criminal investigations” have revealed that cryptocurrency is used for money laundering, therefore it’s necessary to regulate it.
During an interview with DailyCoin, Dmitrijus Borisenka, the CEO of CoinGate talked about the possible issues of the regulation. CoinGate is a Lithuanian fintech company founded in 2014 that offers cryptocurrency payment processing services for various businesses.
“There’s a concern about the travel rule because it requires a standardized solution of how you would solve problems coming from the banking sector; so from the centralized sector to build something on cryptocurrency, which is decentralized in its essence. We’re trying to mitigate all the potential problems and be proactive,”
Borisenka told DailyCoin.
According to Borisenka, instead of only regulating anti-money laundering and financial terrorism, identifying customers, and completing risk assessments, crypto companies would also need to have six or seven pillars of compliance.
That includes having different authorized capital and ensuring all outsourcing procedures are regulated and confirmed.
“With the current regulation, we are happy and also trying to make proposals on how we can even provide more info and be more transparent. But when it comes to equalizing cryptocurrency to electronic money institutions, I think it’s too much, and it would be very difficult to operate under such conditions”
, said Borisenka.
He further elaborated that there needs to be unison in the whole world, which means that the US should also propose and confirm certain regulations together with all other countries.
“Because the EU could put our company in a situation where we would not be able to have any competitive advantage against our US colleagues, let’s say”
, he said.
In 2018, Lithuania was among the seven most powerful blockchain leaders in the world. The country has accumulated experience in the industry’s development and applied practices to create a business-friendly environment for blockchain companies.
“In a free world, I think assets should be diversified, people should be able to choose where they see the values. Cryptocurrency is not a standard, and I was never a proponent of the idea that crypto is here to replace everything,”
According to him, crypto has much to offer, and there needs to be regulations “but everything should be regulated in accordance to the technology, and not to what is being built on the banking layer”.
CoinGate is a part of several working groups where they have conversations with the EU, parliament, and other organizations that regulate cryptocurrency.
At the Global Brands Award 2021, CoinGate was awarded as Most Innovative Cryptocurrency Payment Gateway in Europe.
From time to time the company educates the institutions about how technology works and what other potential risks and problems.
“We are already regulated, even before regulations came in we already started to implement a sufficient amount of anti-money laundering and terrorism financing prevention. For us, regulation is not new and we are in favor of it. The problem with it is that if you over-regulate the industry, all the consumers will go into totally decentralized platforms,”
On The Flipside
- Crypto regulations might be necessary to beat financial crime and other shady activities. Still, over-regulation could cause many problems for cryptocurrency businesses.
- The regulation proposals are currently pending and are subject to change.
Why You Should Care?
Cryptocurrency is associated with self-sovereignty and financial liberty. However, implemented regulations could cause some concerns for crypto users, as well as blockchain businesses in the EU.
Watch the full interview here: