Category Archives: Blockchain, Crypto, Digital Assets, Tokens, CBDCs, Metaverse, NFTs

Is Crypto Bouncing Back, or Bull Trap?

Coindesk | David Z. Morris | Jan 25, 2023

Freepik rawpixel.com bull or bear - Is Crypto Bouncing Back, or Bull Trap?

Image: Freepik/rawpixel.com

Global inflation is at a turning point. Here’s what that could mean for crypto’s nascent turnaround

  • 2023 crypto bounce:  Blue-chip crypto assets including bitcoin (BTC) and ether (ETH) have had a very nice 2023 so far, with BTC up roughly 36% since the New Year and ETH up close to 30%. There’s growing reason to think that “the bottom is in” for crypto markets, and some macroeconomic data suggests this year will be much brighter for the sector than 2022

See:  Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?

  • Why?  [arguably] the crypto bottom could be in since bad actors and the consequences of their contagion-spreading leverage plays have been flushed out. Certainly on an emotional level, getting rid of the likes of Alex Mashinsky, Do Kwon, Three Arrows Capital and Sam Bankman-Fried feels like the chance for a new beginning.
    • While getting rid of scammers should mean we’ve cleared some major downside tail risks, it hardly amounts to grounds for a new crypto bull market.
    • Instead, what will matter most over the next year are macroeconomic conditions, particularly the impact of inflation and interest rates on crypto and other risky assets.  The inflation picture is complex worldwide, but the current rally in BTC and ETH seem to reflect a rising sense that America specifically is on a path to not only whipping inflation, but maybe even to a “soft landing” that stops inflation without crushing jobs.
  • Europe may not be as likely to get a soft landing as the U.S. The European Central Bank, seemingly still concerned about inflation, has signaled a continuation of more aggressive rate hikes in the coming months.

See:  FT Partners Jan 2023 Blockchain and Crypto Market Update Report

  • China continues teetering on the edge of something darker than inflation, or even mere recession.
    • though COVID-19 infections have now fallen dramatically since the surprise end of “Zero-COVID” lockdowns in December, more disruptive surges seem likely to be in the cards.
    • China still faces an ongoing housing crash that threatens the very foundations of its still-developing financial system. Following a crackdown on indebted and corrupt developers in 2020, housing prices have continued slumping – in fact, the decline accelerated in December. That’s potentially catastrophic, because housing makes up a disproportionate 45% of Chinese household wealth compared to a more typical 25% in the U.S., according to Federal Reserve data.
    • Those impacts could include COVID disruptions so severe that they continue to disrupt Chinese manufacturing, possibly making inflation worse globally.

Continue to the full article --> here


NCFA Jan 2018 resize - Is Crypto Bouncing Back, or Bull Trap?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Is Crypto Bouncing Back, or Bull Trap?FF Logo 400 v3 - Is Crypto Bouncing Back, or Bull Trap?community social impact - Is Crypto Bouncing Back, or Bull Trap?

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Is Crypto Bouncing Back, or Bull Trap?




 

Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?

Tristram Waye for Bitvo | Jan 26, 2023

Unsplash Kenny Eliason thinking - Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?

Image: Unsplash/Kenny Eliason

Crypto blew up, governments cracked down, regulation forthcoming?  We are now in a place where awareness has to be exercised in places where trust was once taken for granted.  And that means embracing two principles from the Middle Ages. These are caveat emptor and the fiduciary standard. 

  • Caveat emptor:  The word caveat emptor means buyer beware in Latin. The idea is that the buyer is responsible for assessing whatever it is that they are buying. Its origins date back to the open markets of the 16th century.
    • In developed countries, the concept has moved from buyer to seller beware. Numerous consumer protection laws have been enacted to lift the burden from the buyer and shift it to the seller.  In general, there are numerous remedies for established consumer products.

See:  How Important is KYC for crypto transactions?

  • But for speculative, largely unregulated assets like crypto, caveat emptor is still highly relevant.
    • Keep in mind that in contrast with venture capital, crypto secondary markets are a massive benefit. As William Janeway said about venture capital, cash and control are key elements in VC. Meaning that if the project goes sideways, you can’t sell it in the secondary market and take the loss because that market rarely exists. So you either take a goose egg or add more cash and take control.
  • The fiduciary standard is fundamentally different from caveat emptor. It represents a special duty of care by someone providing specific advice to another person. And it is used widely in various relationships in the financial industry. In the middle ages, this concept was associated with the early trusts.
    • Trusts evolved as the industrial revolution expanded. They now included capital as in shares and other financial assets.  The fiduciary standard is, therefore, intimately associated with the money management business as a result.
    • The fiduciary or advisor is required to always put the interest of the client first. And that advice includes advice that might be against the interests of the advisor.

See:  Valkyrie Interview: Institutional Investors and Crypto Prices

  • Caveat + Fiduciary standard in crypto:  The challenge with regulating a decentralized asset is that it is borderless and fluid. Not to say that it’s clear that many aspects of traditional finance are also borderless and fluid as well. They are. But what it means is that while blockchain protocols and governance standards are designed to prevent bad actors, perhaps the crypto industry should go further.
    • Autonomy and responsibility:  crypto gives you autonomy and responsibility. You can be your own bank with self-custody. And when choosing assets, you can act like your own financial advisor. Caveat emptor means paying attention to outlandish claims and obvious stupidity in white papers.
      • Double-digit interest rates? Caveat emptor.
      • Actions inconsistent with claims? Caveat emptor.
    • You can use the fiduciary standard in a unique way in conjunction with caveat emptor. The idea is to treat your coins, money, and or other assets as belonging to a client. And you have a responsibility to always put that client first.

Continue to the full article --> here


NCFA Jan 2018 resize - Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?FF Logo 400 v3 - Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?community social impact - Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Are Markets Moving Towards a Crypto Fiduciary + Caveat Emptor Standard?




 

FIS Report: Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment Focus

FIS Release | Kim Snider | Jan 24, 2023

FIS investment trends research 2023 - FIS Report:  Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment FocusA global study of 2,000 executives at firms across markets revealed plans to increase investment in embedded finance, environmental, social, and governance (ESG) frameworks, and decentralized finance in 2023, including cautious optimism towards cryptocurrency.

  • Inaugural research by FIS 2023 Global Innovation Report asked c-suite and senior executives in financial services (banks, insurers, capital markets firms, and fintechs) and non-financial businesses (retail, restaurants, travel, gaming and digital content, and technology providers) globally about their key areas of financial investment in 2023.
  • 4% of financial services firms’ executives across the globe say they will invest significantly in developing embedded finance products in 2023 as consumers demand more convenient ways to pay, bank and invest.
  • Nearly two-thirds (61%) of all non-financial services executives told FIS it will be strategically important to have a presence in the metaverse in the next three years.

See: 

Deloitte 2023 Sustainability Report: Most Organizations Have Increased Investment but Tough to Move the Needle

FT Partners Jan 2023 Blockchain and Crypto Market Update Report

  • ESG is top of mind for financial services firms globally, with 60% of executives saying they are developing new ESG products and services.
  • Nearly one-third (29%) of U.S. respondents expressed no interest today in developing cryptocurrency services, only 5% of financial services firms told FIS they do not anticipate offering such capabilities in three years’ time.
    • Financial services firms cited a lack of ecosystem services to support crypto (29%), lack of interoperability between platforms (28%), and lack of clarity around regulations (26%) as key barriers to greater adoption within their organizations.
  • There are concerns about DeFi, with 50% of financial services firms citing poor user experience as a barrier to adoption and 47% saying they need to better understand the risks involved before they will participate.

Continue to the full article --> here


NCFA Jan 2018 resize - FIS Report:  Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment FocusThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - FIS Report:  Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment FocusFF Logo 400 v3 - FIS Report:  Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment Focuscommunity social impact - FIS Report:  Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment Focus

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - FIS Report:  Embedded Finance, Web3 and ESG Lead 2023 Fintech Investment Focus




 

L’Oréal’s NYX Makeup Branded DAO Soon Launching

Decrypt | Kate Irwin | Jan 19, 2023

NYX Pro Makeup US DAO project - L'Oréal’s NYX Makeup Branded DAO Soon Launching

Image: NYX Pro Makeup US

NYX Professional Makeup is launching an online beauty “incubator” in the form of a DAO called GORJS, as well as 1,000 Ethereum NFTs called the “FKWME Pass,” the L'Oréal-owned brand announced Thursday.

  • GORJS, pronounced “gorgeous,” aims to set a precedent for “what beauty will be in the metaverse, and lead the cultural conversation as it relates to the values of diversity, inclusivity, and accessibility,” according to the DAO’s litepaper, or technical explanation.
    • The DAO was first announced last June, but it’s finally launching in the near future with the same vision intact.
    • The FKWME NFT passes will be released to the public on February 1, with a price of 0.19 ETH—about $290 each at present.
  • NYX’s DAO, then, is a move beyond physical cosmetics sold at drug stores—an exploration of what makeup means in the digital age of avatars and pseudonymity.

See:  5 Ingredients to Cook Up Your Own DAO

  • The Ethereum DAO’s members will use non-transferable GORJS governance tokens—capped at a total supply of 100 million—as voting chips for various DAO proposals and projects.
    • DAO members can earn the “soulbound” GORJS tokens in a variety of ways, including by purchasing a FKWME Pass NFT (pronounced “fuck with me”). If a token is “soulbound,” it means it’s non-transferable and cannot be moved from the holder’s wallet.
    • The DAO also has a number of Web3-focused executives on its advisory team, including The Sandbox co-founder Sebastien Borget, Ready Player Me founder Timmu Toke, Polygon Labs Metaverse Lead Brian Trunzo, and Amber Ward, CEO of creative agency Invisible North.

Continue to the full article --> here


NCFA Jan 2018 resize - L'Oréal’s NYX Makeup Branded DAO Soon LaunchingThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - L'Oréal’s NYX Makeup Branded DAO Soon LaunchingFF Logo 400 v3 - L'Oréal’s NYX Makeup Branded DAO Soon Launchingcommunity social impact - L'Oréal’s NYX Makeup Branded DAO Soon Launching

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - L'Oréal’s NYX Makeup Branded DAO Soon Launching




 

Proposed Changes to Crypto Mining GST/HST Rules: What’s Capture and What’s Not?

GST | Jan 12, 2023

Crypto mining taxes - Proposed Changes to Crypto Mining GST/HST Rules:  What’s Capture and What’s Not?In February 2022, Canada’s Department of Finance released draft GST/HST legislation covering cryptocurrency mining. The proposed rules will effectively treat cryptocurrency mining as an exempt supply

  • These proposals have not yet taken effect. According to the Department of Finance, if the legislation is passed, these tax rules will retroactively come into force as of February 5, 2022.

See:  Canada: Release Of Draft Tax Legislation For Consultation including GST/HST for Crypto Mining

  • Section 188.2 deems the provision of “mining activity” to not be a supply for GST/HST purposes. Under the proposed legislation, mining activity covers three pursuits:
    • Cryptocurrency mining: The process by which new cryptocurrency transactions are verified and recorded as a new block on the cryptocurrency network’s blockchain.
    • Cryptocurrency nodes: The process of maintaining a cryptocurrency network’s blockchain and allowing access to the blockchain ledger.
    • Pool mining: The pooling of computer resources by cryptocurrency miners so that they may increase their chances of being the first to validate a transaction. (Cryptocurrency mining occurs on a competitive basis. A mining reward is credited to the miner who validates the transaction first.)
  • Cryptocurrency miners need not collect and remit GST/HST on the miner’s compensation from mining, but the crypto miner also cannot claim input tax credits (or ITCs) for the expenses relating to the cryptocurrency-mining operation.

See:  Canadian Bitcoin Mining 2022 Recap and Outlook

  • Exemption:  The proposed rules for cryptocurrency mining tax in Canada contain an exception: They don’t apply when a person performs the cryptocurrency-mining activity for another person whose identity is known to the first person and who doesn’t qualify as a “mining group operator,” which basically refers to a coordinator of a mining pool. In these limited circumstances—when someone mines cryptocurrency for a known person who doesn’t coordinate a mining pool— section 188.2 doesn’t apply, and cryptocurrency miner may need to charge GST/HST on that supply of mining services.

Continue to the full article --> here


NCFA Jan 2018 resize - Proposed Changes to Crypto Mining GST/HST Rules:  What’s Capture and What’s Not?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Proposed Changes to Crypto Mining GST/HST Rules:  What’s Capture and What’s Not?FF Logo 400 v3 - Proposed Changes to Crypto Mining GST/HST Rules:  What’s Capture and What’s Not?community social impact - Proposed Changes to Crypto Mining GST/HST Rules:  What’s Capture and What’s Not?

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Proposed Changes to Crypto Mining GST/HST Rules:  What’s Capture and What’s Not?




 

Real Estate Investment in Cryptocurrency: Risks and Opportunities

Guest Post | Jan 23, 2023

Freepik kblthailand crypto and real estate - Real Estate Investment in Cryptocurrency: Risks and Opportunities

Image: Freepik/kblthailand

Real estate investment has long been a popular way to build wealth, but in recent years, a new form of investment has emerged: cryptocurrency. This digital currency is decentralized and operates on a blockchain, making it highly secure and transparent. But what are the risks and opportunities of investing in real estate using cryptocurrency? Let’s review the details below!

Understanding Cryptocurrency

Cryptocurrency is a digital or virtual currency that uses cryptography for security. It operates on a decentralized blockchain network, making it highly secure and transparent. The most well-known cryptocurrency is Bitcoin, but there are now thousands of different digital currencies available.

Understanding Real Estate Investments

Real estate investment is a popular way to build wealth and generate income. It involves buying and holding property with the goal of renting it out or reselling it at a higher price. Real estate can take many forms, including residential properties, commercial properties, and land.

Investing in Real Estate With Cryptocurrency 

First and foremost, investing in real estate with cryptocurrency can be a complex process, and it's important to work with a professional who is familiar with the relatively new market. A real estate broker can help you navigate the process of buying and holding property with cryptocurrency, and can provide valuable insights and advice. They can help you find properties that fit your investment goals and can guide you through the legal and financial aspects of the transaction.

Additionally, a real estate broker can help you to find alternative financing options and can advise you on the tax implications of your investment. By partnering with a real estate broker, you can increase your chances of success and minimize the risks involved in investing in real estate with cryptocurrency.

How Do Cryptocurrency And Real Estate Work Together?

Cryptocurrency and real estate are two seemingly unrelated industries, but they have been brought together as an investment option. When it comes to investing in real estate with cryptocurrency, the process works in a few different ways.

One way is to purchase a property directly with cryptocurrency. This means that instead of using traditional currency, such as dollars or euros, the purchase is made using a digital currency. This can be done through a real estate agent or through a real estate platform that accepts cryptocurrency as payment.

Another way is to invest in real estate-related cryptocurrency. There are a number of real estate investment trusts (REITs) and other securities that allow investors to invest in real estate through the purchase of a token or coin. These tokens or coins are typically issued on a blockchain, which allows for increased transparency and security.

Risks of Investing in Real Estate with Cryptocurrency

As the popularity of cryptocurrencies like Bitcoin and Ethereum continues to grow, many investors are starting to explore the possibility of using digital currency to invest in real estate.

However, before diving into this new form of investment, it's important to understand the risks involved.

  • Volatility of cryptocurrency

One of the biggest risks of investing in real estate with cryptocurrency is the volatility of the digital currency. The value of cryptocurrency can fluctuate rapidly and unpredictably, which can make it difficult to predict the return on your investment. This volatility can also make it difficult to determine the true value of your investment, which can lead to potential losses.

  • Lack of regulations

Another risk of investing in real estate with cryptocurrency is the lack of regulation. Cryptocurrency is not yet regulated by any government or institution, which means that there is a greater risk of fraud and scams. Additionally, the lack of regulation can make it difficult to hold accountable those involved in a potential fraud or scam.

  • Difficulty in converting cryptocurrency to cash

Investing in real estate with cryptocurrency can also be challenging when it comes to converting your digital currency into cash. Traditional real estate investments can be easily converted into cash, but with cryptocurrency, the process can be more complex and time-consuming. This can make it difficult to access the funds you've invested in real estate if you need them quickly.

  • Possibility of hacking or fraud

Another risk of investing in real estate with cryptocurrency is the possibility of hacking or fraud. Because the blockchain technology that underlies cryptocurrency is highly secure, hacking attempts are rare. However, they do happen and can result in the loss of your investment.

Opportunities of Investing in Real Estate with Cryptocurrency

Investing in real estate with cryptocurrency can open up a range of opportunities for investors. The following are some of the main ones.

  • Potential for high returns

One of the biggest advantages of investing in real estate with cryptocurrency is the potential for high returns. Because cryptocurrency is still a relatively new and volatile market, it can be highly profitable for investors who are able to navigate the risks. Additionally, the value of real estate typically appreciates over time, which can also lead to significant returns.

  • Flexibility in international investments

Investing in real estate with cryptocurrency also offers more flexibility in terms of international investments. Traditional real estate investments are often limited by geographic boundaries, but with cryptocurrency, it is possible to invest in properties anywhere in the world for qualifying investors. This can open up new opportunities for investors to diversify their portfolios and take advantage of global real estate markets.

  • Blockchain technology for secure and transparent transactions

Another advantage of investing in real estate with cryptocurrency is the use of blockchain technology. This technology makes it possible for secure and transparent transactions, which can increase trust and confidence among investors. Additionally, the transparency of blockchain technology makes it more difficult for fraud and scams to occur.

  • Possibility of alternative financing options

Investing in real estate with cryptocurrency also opens up the possibility of alternative financing options. For example, blockchain-based platforms such as real estate investment trusts (REITs) or crowdfunding platforms can provide a new way to raise capital for real estate investments. This can make it easier for investors to participate in real estate deals, regardless of their financial resources.

Recommendations For Those Considering Real Estate Investment With Cryptocurrency

  1. Do your research: Investing in real estate with cryptocurrency is still new and uncharted territory, and it's essential to do your own research and consult with financial professionals before making any investment decisions. It's important to understand the risks and opportunities involved and to have a clear understanding of the market and the projects you are investing in.
  2. Diversify your investments: Diversifying your investments is key to minimizing risk. Instead of putting all your eggs in one basket, it's recommended to invest in multiple properties and in different types of cryptocurrency.
  3. Invest in reputable projects: Not all cryptocurrency and real estate projects are created equal. It's important to invest in reputable projects and companies that have a proven track record and a solid business plan.
  4. Be aware of the tax implications: Investing in real estate with cryptocurrency can have tax implications, so it's important to be aware of them and to consult with a tax professional.

See:  Canadian Bitcoin Mining 2022 Recap and Outlook

Overall, investing in real estate with cryptocurrency can be a highly profitable opportunity, but it's important to be aware of the risks and to take the appropriate precautions. Hence, make sure to follow the above-mentioned tips to make the most of your crypto investments.


NCFA Jan 2018 resize - Real Estate Investment in Cryptocurrency: Risks and OpportunitiesThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - Real Estate Investment in Cryptocurrency: Risks and OpportunitiesFF Logo 400 v3 - Real Estate Investment in Cryptocurrency: Risks and Opportunitiescommunity social impact - Real Estate Investment in Cryptocurrency: Risks and Opportunities

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - Real Estate Investment in Cryptocurrency: Risks and Opportunities




 

How Important is KYC for crypto transactions?

Guest Post | Jan 20, 2023

Freepik crypto - How Important is KYC for crypto transactions?

Image: Freepik/crypto

Cryptocurrency is a revolutionary new form of money and it’s here to stay. With its decentralized, digital nature, it can be utilized for financial transactions with greater privacy than a traditional currency like dollars and euros. But even though blockchain technology offers more security than other systems, there are still necessary steps that need to be taken in order to ensure that crypto transactions are done safely. In this blog, we'll be taking a look at why knowing your customer (KYC) is important for crypto transactions.

What Is KYC?

KYC stands for ‘know your customer’ and is a set of procedures required by most financial institutions. It is a process by which businesses verify the identity of their customers in order to ensure that they are not involved in any illegal activities such as money laundering or terrorism financing. This involves collecting information like names, addresses, and other documents to verify the customer’s identity.

What is AML?

AML stands for ‘anti-money laundering’, which is a set of laws and regulations to prevent criminals from using the financial system to launder money. AML requires businesses to put in place certain measures to help identify suspicious activity and ensure that customers are who they say they are.

What is Crypto?

Crypto is a digital form of currency that exists on a decentralized, secure network called the blockchain. It can be used to make payments, store value, and transfer funds without any third-party interference like banks or governments. This makes it an attractive alternative for those who want to make financial transactions without having to worry about the regulations associated with traditional currency. Transactions are secure, private and fast, so it’s no wonder that more and more people are turning to cryptocurrency as time goes by.

Why Are AML Regulations In Place?

AML regulations were put in place to protect businesses and consumers from financial crime such as money laundering. They also help ensure that the customer is legitimate and not attempting to use someone else’s identity for illegal activities. These regulations can help reduce fraud, as well as provide better protection for customers and businesses alike.

What Are Some Examples of Anti-Money Laundering Regulations?

Examples of AML regulations include customer due diligence (CDD), suspicious activity reports (SARs), and know-your-customer (KYC) processes. Let's look further into two and how they prevent money laundering:

Customer Due Diligence:  This is a process where businesses perform due diligence on their customers to ensure that they are not involved in any criminal activity. This includes verifying the customer’s identity, assessing their source of funds, and monitoring their transactions for signs of suspicious activity.

Suspicious Activity Reports: Businesses are required to report any suspicious activity or transactions that may be related to money laundering. This helps prevent criminals from using the financial system for illegal activities.

Combined with KYC, these regulations help make sure that businesses are not unwittingly used for money laundering and other financial crimes. This keeps cryptocurrency transactions safe and secure, while at the same time ensuring that customer data is kept private and secure.

How Important Is KYC For Crypto Transactions?

Cryptocurrency transactions are often anonymous, meaning that there is no way to verify the identity of the sender or receiver. Therefore, it is important for businesses involved in crypto transactions to ensure that proper KYC measures are taken.

What Are The Benefits of Using KYC For Crypto Transactions?

Let's take a look at some of the benefits of using KYC for crypto transactions:

  • Increased security – By verifying the identity of customers, businesses can reduce the risk of fraud and money laundering. This helps to ensure that customer funds are safe and secure, as well as preventing malicious actors from taking advantage of the system.
  • Enhanced customer experience – KYC procedures help to create a smoother, more secure process for customers. This ensures that customers have a positive experience when using crypto transactions, as well as preventing any potential fraud or identity theft.
  • Reduced risk – KYC helps businesses reduce the risk of being involved in illegal activities, as it allows them to verify the customer’s identity before any transactions take place.
  • Improved compliance – AML regulations require businesses to take certain steps to help prevent financial crime. By implementing KYC procedures, businesses are better able to meet their compliance requirements.
  • Improved trust – Customers can have greater trust in a business when they know that it is taking the necessary steps to protect their funds and identity. This helps to promote customer loyalty and build long-term relationships.

Is The Blockchain Secure Without KYC?

The blockchain is an immutable ledger, meaning that it is nearly impossible for anyone to alter or reverse a transaction once it has been written to the chain. However, this does not mean that there are no risks involved with using cryptocurrencies. Without KYC procedures in place, there is still a risk of malicious actors exploiting the system and attempting to launder money or steal identities. That’s why it is so important for businesses to use KYC when dealing with crypto transactions.

Is Crypto The Future?

Cryptocurrency is still a relatively young industry, and it’s uncertain whether it will become widely adopted in the future. But one thing is for certain: KYC procedures are essential for businesses involved in crypto transactions to ensure that their customers' funds and identities are safe.

See:  Will Crypto Recover in 2023? Quite Possibly, and Here’s Why

By taking the necessary steps to implement KYC regulations, businesses can help protect themselves and their customers, as well as create a more secure crypto environment.

In conclusion

KYC is an important part of any cryptocurrency transaction. By implementing proper KYC procedures, businesses can reduce the risk of fraud or money laundering while also creating a smoother and safer experience for customers. This helps to promote customer trust and loyalty, while also ensuring compliance with AML regulations. With the right measures in place, businesses can help ensure that crypto transactions are secure and compliant.


NCFA Jan 2018 resize - How Important is KYC for crypto transactions?The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

Latest news - How Important is KYC for crypto transactions?FF Logo 400 v3 - How Important is KYC for crypto transactions?community social impact - How Important is KYC for crypto transactions?

Support NCFA by Following us on Twitter!







NCFA Sign up for our newsletter - How Important is KYC for crypto transactions?