Should you be assessing your Cryptocurrency business now because Crypto will be regulated.

At the beginning of January 2019 market cap of crypto was about 200 million and in November it hit 3 trillion, colossal growth in a short period of time?  But with success has come confusion and anxiety in the system – is Cyrpto here to stay, is it safe, should it be regulated? As Central banks line up to issue their own digital coin you could argue that there lies the beginning of a regulated asset, de facto. There are countless stories/examples of fraud, scams, and abuse in the currently unregulated world of Cryptocurrency so there is a ready-made risk spectrum of Financial Crime and Market Abuse plus a market that is open to Data Privacy Abuse and Security breaches via coin theft from wallets. At the heart of this meteoric growth lies investors and the need to protect them so Conduct Risk is evident and as issuance, trading and Repoing/lending of Crypto assets accelerates the need for transparency and protection via regulation increases.

The rise of Cryptocurrency is also accompanied by an emerged understanding that as this market has developed it has brought infrastructure realisations using the new technology and the efficiencies of payment transfers that benefits all from Governments to those in need of financial aid to small business transaction systems.  This challenges the status quo of existing methodology and markets creating competition which generates interest and fear.  The similarities of Cryptocurrency trading means to traditional markets means there are parallels to the established capital markets such as Equity trading with the existence of brokerage style accounts, exchanges, and market dealers . Does this mean that the senior regulators of the world should impose a Wholesale banking style of regulation?  What is clear that for the Crypto market to flourish and protect investors, encourage greater development, make it hard for criminals to benefit and to legitimise the market there will be forces brought to bear, the natural forces of the market and the competition.  Historically, all markets have grown this way and Crypto will be no different.

So regulation is coming – it will be designed to encourage competition in the Cyrpto asset world but the regulation has to be tailored to the specific characteristics of each type of Crypto and the technology that supports it; Financial Crime and Counter-Terrorist Financing, Taxation, Investor Protection and Conduct Risk and Data Privacy will be at the forefront.  As time passes specific regulation such as payment transmission, exchange rulings and regulation relating to assets backed by reserves will be realised.  If there is one thing people have learnt over time is that your firm’s reputation (and the market you operate within) is essential. As the market Cryptocurrency market evolves and the players mature then there will be realisation that there is a need for regulation to protect the market, the firms, and the investors and that realisation is fast approaching.  Once realised and appropriate regulation embedded then watch how fast the Cryptocurrency markets develop and matures.

What an opportunity and an exciting but challenging time.  Start to think about regulation and the framework your firm needs and prepare as it is arriving fast!

Governance, Risk and Compliance Limited, shares these experiences with you as we wish to demonstrate our distinct advantage over other Compliance Consultancies, Compliance Service firms and Recruiters.  Cryptocurrency and the future of this market is a particular focus for us as an advisory firm as we talk to and deal with many players in the market. As market practitioners, we deliver compliance officers with substantial experience and expertise who are more than willing to be hands-on to deliver high level risk solutions for you.  If you would like to discuss how we can help you please contact us by phone on 0203 1488 885, or by email


  • Dadmin
  • November 12, 2021

Join our Consulting