A report that was released in July 2018 by the Big Innovation Centre, DAG Global and Deep Knowledge Analytics claimed that the UK would be the global hub for blockchain technology and cryptocurrency economy by the year 2022. This is an excellent development, but you have to wonder why the UK isn’t a leader now considering it’s the global financial heavyweight, with a liberal market economy, smart regulatory environment, and excitement for innovation, according to the Forbes article.
Cryptocurrencies and blockchain technologies are unable to become mainstream if the banks and the exchanges don’t cooperate with each other. Every single advantage that cryptocurrencies and blockchain can bring to the table unless the banks and financial institutions mass adopt it.
Apprehending the Flaws
Traditional financial institutions need to realize and acknowledge the fact that cryptocurrencies and exchanges are taking an increasingly proactive approach towards self-regulation in conjunction with abiding to already identified regulations like Anti-Money Laundering (AML). The players are aware that crackdowns can be avoided in the crypto industry if they take a proactive stance in areas like security, AML and anti-fraud.
Cooperation and innovation can be produced if the banks and exchanges initiate a peaceful agreement process between them. The ability for both of them to notice any high-level activity and manage it, the tools that allow visibility to banks to notice the transactions occurring in the exchange and to exchanges to visualize the internal transactions happening in the bank are all very important.
These institutions also need to realize that the exchanges are already benefiting from the blockchain technology as they provided them with a faster and more secure way of storing values in addition to the security and the inexpensive cost to run it. Therefore, the sooner these institutions can start to understand them instead of ignoring them, the better.
Decreasing the KYC requirements on crypto transactions of less than US$ 1,000 would encourage users and companies to transact using a single account instead of using multiple accounts to mix good and bad money. Therefore, their KYC capabilities can be enhanced if the banks allow their customers to open a crypto account via exchanges. An added benefit would be that if this does happen, then banks will be capable of reaping the benefits of the blockchain technology.
Key to Furnishing A Well Built Solution
This can only work if they both have an understanding about the areas in which they need to operate and that their conversation should be entirely factual. An incorrect argument given by banks is that exchanges are highly risky or that it won’t be possible to manage a relationship with them appropriately. Exchanges are identifiable and are not a part of the regulatory jurisdiction. It’s even possible to assess what AML the exchanges are applying and mark them to our system. You can use this to provide information to the market.
It appears that progress isn’t that far behind as large institutions are not only investing in cryptocurrencies, but they are issuing their crypto coins as well. The world’s first centralized, bank-owned, cryptocurrency exchange was launched publically in Japan in July 2018. They have already started accepting applications for new accounts.