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Bitcoin Price Drop Is Surrounded By Stricter Regulations

The volatility of the cryptocurrency markets, the risks of financial crime and its effervescent popularity, have made regulators in several countries of the world consider it necessary to implement greater vigilance over the digital finance ecosystem, trying not to stifle innovation.

Recently, countries like China and Sweden , where they develop their own central bank issued digital currencies (CBDC), cracked down on crypto assets, contributing to a rapid market contraction of nearly 30%.

Also, some British banks, including Starling, Monzo and Barclays, have suspended transfers to cryptocurrency exchanges for their clients , due to a potential increase in financial activity suspected of money laundering, according to a Telegraph publication on May 29, 2019. 2021.

Meanwhile, the administration of US President Joe Biden is investigating “gaps” in the supervision of cryptocurrencies, analyzing how to prevent them from being used to finance criminal activities or terrorism.

At the same time, the president of the United States Securities and Exchange Commission (SEC), Gary Gensler, said that it was necessary to have legislation dedicated to cryptocurrency exchanges. Emphasizing that money laundering and illegal activities are its main objective.

It has been noted that the SEC could reject eleven applications to authorize exchange-traded funds for bitcoin (ETFs), and the past market crash would be one of the reasons that could strengthen its position against. However, the commission has yet to make a decision.

Something similar has happened in Mexico, where Santiago Nieto, head of the Finance Intelligence Unit (UIF) of the Treasury, has called for bitcoin and cryptocurrencies to be regulated by the National Banking and Securities Commission (CNBV), for the creation of risk models that prevent money laundering.

Regulations could threaten privacy
In part, the regulations that are carried out on exchanges and cryptocurrencies are part of a series of objectives proposed by the Financial Action Task Force (FATF) to mitigate the presumed risks that cryptocurrencies present for terrorist financing and laundering. of money.

The international group asks member countries to deepen their supervision of service providers with virtual assets, which includes greater measures of knowing your client, and the sharing of user data between the different providers.

It also represents an expansion of the virtual asset and service provider category, including stablecoin issuers, decentralized exchanges, DeFi tools and even developers. This global coordination would go against what some consider to be the decentralized essence of bitcoin .

However, on several occasions, some of these regulations have proven to be ineffective. For example, despite China’s ban on the use of bitcoin, there has been an increase in its use clandestinely, according to reports from Bloomberg. In addition, since 2013, bitcoin has been banned in China at least 7 times and yet its use continues to grow.

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