RegTech Solves Cryptocurrency’s Vulnerability Issues
RegTech’s burgeoning influence in cryptocurrency exchange and investment couldn’t come at a better time as governmental regulation and money laundering operations threaten innovation and decentralization.
As crypto investment booms, it brings with it heightened speculation from financial regulators monitoring its spiking popularity, and more recently its vulnerability. According to KPMG’s 2021 “Pulse of FinTech” report, cryptocurrency and blockchain investment rose from $5.5 billion in 2020 to a whopping $30.2 billion in 2021 as new cryptocurrency exchanges emerge daily.
Rapid growth consistently outpaces market regulation and policing, and just last week we witnessed the true vulnerability of cryptocurrencies as The Department of Justice arrested two New York City residents on conspiracy to money laundering and conspiracy to defraud the U.S. The couple made away with $4.5 billion after a breach of security in the cryptocurrency exchange platform, Betnifex back in 2016.
We are at an awkward crossroad between government regulation and market freedom in the crypto world, which leads us to the hero of the moment: RegTech.
This crossroad is where we’ll see the intermediary of Regulation Technology (RegTech) and government risk management and compliance software (eGRC) solve crypto exchange’s monitoring and regulation problem before it gets uncontrollable in-house and requires government bodies to intervene and regulate, and even punish.
RegTech companies offer monitoring and regulatory fund management (among other services) solutions to financial institutions by mitigating risks from governmental non-compliance to money laundering and many other mishaps in between.
RegTech, or “regulation technology” took an upward trajectory after the 2008 housing crisis taking the internal monitoring and regulation of financial transactions task off of the hands of major financial institutions of all sizes and functions.
While some RegTech companies focus on identifying and red-flagging fraudulent credit card usage and others on anti-insider trading among investor relations, the next wave of RegTech effectiveness is engaging in the sphere of crypto currency investment and exchange. Standard Know Your Customer (KYC) and Anti-Money Laundering (AML) RegTech practices are being utilized in the world of blockchain to combat massive fraud schemes as mentioned above with Betnifax.
Here are a few some RegTech companies leading the industry in crypto monitoring and regulation.
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