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The ongoing evolution of global crypto markets

Che Sidanius
Che Sidanius
Global Head of Financial Crime & Industry Affairs, Refinitiv / Chair of the Europe Chapter, Coalition to Fight Financial Crime

As pressure mounts on regulators to ensure a safer environment for all stakeholders in the crypto and digital asset space, a new on-demand webinar from Refinitiv takes a detailed look at this dynamic industry.

  1. The growth in crypto and digital assets has created many fresh opportunities, but also a number of associated new risks.
  2. In response to these risks, financial crime regulation is changing. The regulation aims to prevent the use of cryptocurrencies and markets in areas such as money laundering and terrorist financing.
  3. A Refinitiv Webinar explores the big questions that are being asked about the use of cryptocurrencies and digital assets.

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A fragmented approach to regulation

As the digital revolution continues to unfold at exponential rates, the focus on cryptocurrencies and digital assets remain at the top of the global political agenda.

The eye-watering rate of growth within the industry in just the last two to three years has spawned a plethora of opportunities, along with a host of new risks – and as these new risks emerge, market participants need to remain vigilant, proactively identifying and managing areas of concern in order to avoid negative ripple effects within the wider global economy.

The total market value of crypto assets is more than $2 trillion

The future of this dynamic industry depends on all stakeholders feeling assured that they operate in safe, resilient markets, but this is not yet the reality.

To this end, global regulators are focusing more attention on the sector – financial crime regulation is changing in a bid to ensure that cryptocurrencies and markets are not used for purposes such as money laundering and terrorist financing.

Complying with these changing rules is not, however, straightforward.

There is currently a fragmented approach to regulation: different regulatory approaches exist in different jurisdictions, and this, coupled with the cross-border nature of cryptocurrency, can lead to instant complexity surrounding obligations and compliance.

On the ground concerns: three burning questions

Our webinar seeks to answer some of the most burning questions about the use of cryptocurrencies and digital assets, with three particularly relevant issues briefly discussed as follows:

1. How likely is it that all VASPs will be regulated within the next 24 months?

VASPs in the UK are already regulated, because the Financial Conduct Authority (FCA) takes the issue of crypto market safety very seriously indeed.

Further afield, we have seen a flurry of international regulatory activity as more and more countries seek to roll out relevant regulation. The expectation is that within 24 months the majority of countries should have regulations in place.

One of the biggest hurdles to compliance is a lack of regulatory consistency.

Most crypto firms operate on a cross-border basis, but it is simply not practical to adhere to multiple regulatory regimes and obtain separate licences for each jurisdiction. A coordinated licence regime is needed, where firms can hold one main licence that covers all the jurisdictions in which they operate.

In the absence of such a solution, there is the risk that some exchanges will gravitate to more stringent regulatory environments in search of safety and confidence, while others may move to less stringent environments in order to maximise their agility and speed of innovation.

In addition, there is the risk that bad actors will gravitate to jurisdictions with fewer regulations.

What is therefore needed is an international best-practice setter that can deliver a level playing field combined with a robust global approach to regulation.

2. Can crypto be used to evade sanctions?

Against the backdrop of current international sanctions against Russia, there is a perception that crypto may offer a way for sanctioned parties to circumvent regulations.

While it is true that the longer sanctions persist, the more risk there is of cryptocurrency being used in this way, it would nonetheless be very difficult for any significant sums to be moved without attracting attention.

Once detected, any assets involved could then be blocked and the transaction reported. This means that the actual risk of crypto successfully being used to evade sanctions is fairly low.

3. What is the consensus opinion on tumblers, mixers and privacy coins?

Tumblers and mixers are used to obscure identity and make it harder to pinpoint the true owners of cryptocurrency. When they are identified, firms should immediately ask questions about the intentions of the user.

In the same way, privacy coins expose exchanges to risk and, when detected, should be treated as suspicious.

It is ultimately down to individual firms to conduct enhanced due diligence (EDD) where they feel that potential risk exists.

Such measures will help them to better understand the customer’s risk profile, always bearing in mind that if observed behaviour does not align with known facts about that customer, there could be a problem.

Towards a safer, more secure environment

Despite the potential risk inherent in crypto markets, it is worth remembering that there are many tools available to help firms pinpoint illicit activity.

Those firms that consistently conduct a thorough screening and ensure that they have robust anti-money laundering (AML) controls in place are best placed to avoid any potential pitfalls.

Evolving regulations are also adding layers of security.

For example, the travel rule offers additional risk mitigation by helping all parties to understand exactly who is on the other side of any transaction.

At Refinitiv, we will continue to deliver the leading-edge technology and solutions our clients need to navigate the complex world of cryptocurrency, and more than this, to remain on the right side of a dynamic and evolving regulatory curve.

Decrypting AML compliance for cryptocurrencies and VASPs


How likely is it that all VASPs will be regulated within the next 24 months?

VASPs in the UK are already regulated, because the Financial Conduct Authority (FCA) takes the issue of crypto market safety very seriously indeed.