Major Regulators Like The FCA Look To Legislate Cryptocurrency

Crypto Regulation

The crypto market stays in limbo as we move forward into the last four months of the year. Now, the FCA is looking for new ways to regulate cryptos.

The crypto industry’s presence is undeniably more widespread than in its early days. While revolutionary potential has shaped more ideas and approaches, it has also increased the space for frauds and scams, resulting in significant losses.

Tightening enforcement is the inevitable result of a series of scandalous events. Cryptocurrency and high-risk investments are slightly different.

In a press release published on Monday, the U.K.’s Financial Conduct Authority (FCA) has stepped in to tighten high-risk investments’ regulations with a set of new rules.

The regulatory agency stated that strong rules for cryptocurrency will be soon introduced.

FCA is Looking for A Wider Scope

The FCA targets marketing activities as a priority, aimed at strengthening customer protection against illegal acts linked to high-risk investments.

The rules require a sufficiency of clarity over risks associated with investing in an instrument. Additionally, investment incentives like referral bonuses are illegal under the FCA’s new regulations.

“We want people to be able to invest with confidence, understand the risks involved, and get the investments that are right for them which reflect their appetite for risk,” said Sarah Pritchard – the FCA’s Executive Director of Markets.

The rules do not directly impact crypto promotions but the agency has warned about tightening cryptocurrency regulations, sooner or later.

For the UK regulators, the impression of crypto is unlikely positive and digital assets always come with relatively high risks. According to their statement, investors need to acknowledge high-risk factors linked to crypto assets before jumping on board.

A Long Time Coming

The UK government previously put the monitoring power in the hands of the FCA and it did not take too long for the agency to take action.

In March, Bitcoin ATMs were ordered to ban. Cryptocurrency advertising activities have also been under the radar of the Advertising Standards Agency. In March, an enforcement notice was published, requiring crypto firms to clarify the market volatility to customers and to stop making use of novice investors.

Too many warnings will soon turn into actual implementation and the crypto promotion services, as stated by the FCA, will soon be strictly regulated.

Crypto scams and other criminal activities have always been the biggest concerns of global governments.

The U.S. authorities have long called for stricter control over cryptocurrencies. The Federal Bureau of Investigation (FBI) warned people about scammers using ATMs to carry out a high-tech wire transfer fraud that tricks people into converting cash into cryptocurrency.

Authorities in the United States have recently increased their scrutiny of tech behemoths and how they work to protect customers.

Senator Sherrod Brown, Chair of the Senate Banking Committee, sent a letter to Alphabet (parent company of Google) and Apple last week requesting information on how to prevent deceptive crypto-advertising apps.

Multiple Layers

The rapid advancement of digital technology in recent years has resulted in an explosion of cryptocurrencies and virtual currencies. Meanwhile, most countries’ regulatory authorities are befuddled and are having difficulty developing a legal framework as well as a management method.

Cryptocurrency regulations must be tightened, particularly for stablecoins and centralized crypto exchanges. Without going into specifics, the reason is obvious; consider what happened with centralized finance and the vulnerability of stablecoin’s system in recent incidents.

Most importantly, fair regulations will encourage widespread acceptance. Because eventually, mass adoption is all that matters.

So, while the goal is obvious, the approaches remain obscure. Recent regulatory moves appear to be only scratching the surface of the iceberg when the entire object necessitates prolonged observation until we extend our reach.

Cryptocurrencies, like the underlying blockchain technology, combine both opportunity and risk. Governments should indeed solidify collaboration to reduce risks and fraud in cyberspace in order to reduce the risks of this sector.

The post Major Regulators Like The FCA Look To Legislate Cryptocurrency appeared first on Blockonomi.

Op-ed: How leveraging blockchain data can be a revolutionary act

The legitimacy of cryptocurrencies is under constant threat from bad actors. Wash trading is a huge issue, for example, and is widespread in NFT sales: one high-profile case was exposed on a popular marketplace where 94% of $2 billion transacted was proved to be wash traded. How did we find out about it? An NFT::Listen

The legitimacy of cryptocurrencies is under constant threat from bad actors. Wash trading is a huge issue, for example, and is widespread in NFT sales: one high-profile case was exposed on a popular marketplace where 94% of $2 billion transacted was proved to be wash traded.

How did we find out about it? An NFT analytics site examined blockchain data over a period of eight days. No small undertaking, but a highly valuable service that should become commonplace if the industry is to foster trust.

Analytics and data aggregation firms are thus primed to become mainstays of the space by providing vital information on what is really happening on blockchains. In their absence, critics and regulators have been well justified in expressing doubts over the burgeoning technology. 

Business applications will proliferate, too, as evidenced by major moves coming out of Chainlink (LINK). Last year, the company announced a partnership with news organization Associated Press to make its datasets available to leading blockchains, where data can be used to automate key processes that happen on-chain. 

Whether informing markets of election race calls, triggering an on-chain trade when a company’s quarterly financials are released or even augmenting the appearance of NFTs based on real-world events, there is significant scope in this one partnership. Applied to the entirety of the business world across multiple industries, there could be a gigantic shift in the use of data.

Good Information

Properly collated and well-analyzed data holds the potential to weed out dodgy companies and individuals and stop them from fulfilling nefarious goals. In theory, blockchain data is available to the public. It follows that anyone can do the work themselves. Practically speaking, this isn’t feasible because your average vigilante or even nascent analytics company lacks the technology to create vast datasets at a pace in a scalable manner.

Knowing exactly what is needed in data terms is a significant hurdle. So a bespoke platform would need to work with industry players—and more specifically, developers—to draw out useful data on a scale not yet seen in the blockchain industry. In its early stages, aggregation and analytics will face steep learning curves.

Applying Data Holistically

For business applications, private blockchains predominate. Customized, structured data can be processed accordingly into a private dataset. This will be useful commercially. When a company has paid good money to draw out data based on highly specific requests, they are likely to want to protect it, especially when one considers how these datasets are ever-expanding due to the nature of blockchain and thus remain highly relevant. Access can moreover be sold to other firms in a licensing agreement.

When it comes to entities looking to siphon data for the public good, there is scope to construct datasets that allow crowdsourced analysis. The crypto industry sorely needs this. There is not enough money in exposing wash trading and other malicious activities: we currently rely on the actions of a dedicated minority. Proper, universal access to clean data can stimulate the emergence of public bodies that help cryptocurrency to become a self-regulated field.

We’ve barely scratched the surface. Insurance is a behemoth consumer of data as it informs the entirety of the business model because brokers need to know how to charge competitive yet profitable premiums. And Chainlink is leading the charge again here: last year, they penned a deal with insurance startup Arbol, which provides crop insurance for farmers and enterprises to provide decentralized weather data. In this instance, smart contracts can trigger payouts depending on weather conditions data.

Reconciling Data

Traditional businesses face a plethora of issues when selling data to third parties but in crypto, this is less of a concern, because everything is transparent. However, most projects in the web3 space are not completely decentralized, leading to decision-making on whether to take certain data off-chain.

The beauty of an all-encompassing data aggregation protocol is reconciling on-chain data with off-chain data: companies will be able to customize the data links in order to make it work. Only seeing half the data is fine with most projects because all they need is the on-chain movement of data to make whatever decisions they need to.

The core technology for a successful data aggregating and cleaning process must be cross-chain compatible because while Ethereum Virtual Machine (EVM) chains dominate the space, you have chains such as Solana creating cutting-edge solutions as well.

The text itself within the blockchain data has to be structured in a very specific way for chains such as Solana, as the entire technology underpinning it is different. Furthermore, the high transactions per second rate offered on Solana mean that from the genesis block up until real-time, the database is far more vast than most other chains. There are hundreds of thousands of transactions per second on Solana.

When a database is chock full of data, it might not necessarily be overly useful for other people. For a data cleaning service provider, it becomes very difficult to structure the data to filter out the noise from the clean parts when considering the huge volume of transactions, many of which are meaningless and not at all valuable for analytics.

For centralized chains, data aggregation and subsequent analysis can help build trust in an environment where the entity itself controls validators when they, in turn, can exert political control over the key players in the entire ecosystem. Once trust is lost, you can’t readily get it back, so cutting through the noise and seeing what is happening with on-chain transactions can be invaluable. This is one of the reasons blockchain data is so important and can spark drastic changes in how we interact with cryptocurrencies.

The post Op-ed: How leveraging blockchain data can be a revolutionary act appeared first on CryptoSlate.

Major Regulators Like The FCA Look To Legislate Cryptocurrency

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