Digital currencies such as Bitcoin, Ethereum, Tether, Binance Coin, and Ripple are increasingly gaining importance. Compliance adherence also plays a crucial role for these. We explore how Crypto Compliance shapes the development and influence of leading digital currencies. Which regulatory frameworks particularly challenge digital currencies, and what steps are necessary for them to meet both legal and operational standards?
What is Crypto Compliance?
Crypto Compliance particularly focuses on wallets - virtual wallets in the form of apps used for storing and conducting transactions with cryptocurrencies like Bitcoin. A major problem with crypto transactions is their difficult controllability, which makes them susceptible to abusive activities. Therefore, reputable cryptocurrency companies and investors are increasingly welcoming regulations and compliance rules.
Since the surge in Bitcoin's value after 2017 and the emergence of additional cryptocurrencies, interest in this new asset class has grown. Simultaneously, new FinTechs and trading venues have developed. Initially, financial regulatory authorities worldwide reacted hesitantly, but as suspicions of money laundering and fraud in the crypto industry increased, calls for stronger regulation grew.
What the EU and the DACH region require in terms of Crypto Compliance
Almost all countries have now addressed the issue and are beginning to develop rules for trading cryptocurrencies.
EU:In the EU, the guidelines for services related to cryptocurrencies are encapsulated in MiCAR (Markets in Crypto-Assets Regulation). The regulation, adopted by the European Parliament in April 2023, imposes strict regulatory requirements on issuers of crypto-assets and service providers who trade on secondary markets. The measures and procedures include, among others:
Switzerland
In Switzerland, the handling of cryptocurrencies is based on the Basel Framework Agreement, which has been developed since 1975 by the Basel Committee on Banking Supervision (BCBS). Since 2019, the existing guidelines have been expanded to include the new asset class of crypto-assets. Banks that deal with crypto-assets must:
- conduct adequate checks, as they have a duty of diligence.
- adapt governance and risk management to the increased risks.
- improve transparency and disclosure.
- meet very high capital requirements when offering services with cryptocurrencies.
