Regulations are not going anywhere. On the contrary, financial service providers face more regulatory challenges and higher costs than ever before. During the early days of cryptocurrencies, a “Wild West” culture emerged when regulators, uncertain on how to tackle this thing called blockchain, paid little attention to the thefts, scams and hacks plaguing the virtual-asset market.
Today, this is no longer the case. No matter their roots, every virtual asset project from Telegram to Shapeshift to Libra is ramping up compliance while regulators continue to issue guidance, enforce regulations and pay closer attention to digital securities platforms, crypto exchanges and other virtual-asset service providers, or VASPs, catering to the residents of their respective jurisdictions. Despite this, many organizations in the blockchain space still face a painful combination of misinformation, opaque legislation and willful ignorance when it comes to fulfilling their obligations in each of the markets they serve.
As the demand for digital tech continues to increase, regulatory compliance has become a competitive advantage and key differentiator for successful fintech and digital-asset platforms. In contrast to the Wild West days in the sector, “compliance” is now the new buzzword when promoting fintech services, with headlines like “the compliant _______ platform” plastered across the websites of digital securities, security tokens, ICOs, FX, OTC, brokers and exchanges.
Unfortunately, calling something compliant does not make it so. The very definition of compliance is not only a moving target, it also includes gray areas such as a “risk-based approach,” which can change massively depending on the nature of one’s business activities and client base. Without defined industry standards for guidelines such as Know Your Customer or Anti-Money Laundering, it is easy to see why VASPs — even those with the size and budgets of Coinbase, Binance or Libra — struggle to maintain a compliant business.
To stay ahead, VASPs must have a clear understanding of their regulatory obligations and how this impacts their business viability in any given market. Avoiding the three most common pitfalls of compliance can shorten a company’s time to market, create barriers to entry for competition, and protect its reputation.
Pitfall 1: KYC means verifying users’ identity during onboarding
This is the biggest misconception that plagues most digital securities platforms, exchanges and other virtual asset service providers in the market today. Knowing your customer is not a one-time thing — you are obligated to keep up-to-date, auditable records for each client for the entire time you serve them.
In many jurisdictions, your record-keeping obligations can extend for years after the client ceases to do business with you. In order to build a robust and scalable business, it is important to account and design for KYC refreshes, ongoing AML screening, transaction monitoring and user re-authentication for the entire client lifecycle.
Pitfall 2: Changes to compliance requirements depend on where you are based
Most virtual-asset businesses are subject to a wide range of regulations — data privacy, personal information protection, KYC, AML, securities and derivatives, payments and digital identity. Some regulations, such as the GDPR, apply across European Union members and harmonized jurisdictions. Others, such as payments services, are quite nuanced with complicated, state-by-state regulations for money services and transmitters as well as reporting requirements. In Singapore, payment token businesses have had to close up shop or leave the country as they wait for the ability to legally do business.
It is important to understand the regulatory obligations in every market where you serve even a single user. For example, holding a license in Estonia or Lithuania may not provide the ability to offer that same service in Germany, the United Kingdom or Canada. While a business can take advantage of “passporting,” using a single financial services license across multiple jurisdictions, it is important to understand where and whether other regulatory variations exist, including how data is collected, processed, maintained and reported.
Pitfall 3: Build it once and we are good to go
While this is theoretically possible in very small markets, in practice, a business’ activities are most likely subject to multiple regulators in each market it serves. New regulations are being rolled out every week, potentially impacting how you process or maintain your users’ personal information, verify their legal identities, screen for risk, perform customer due diligence, or document successful compliance operations.
In order to stay ahead of these challenges, management teams must look at their business through multiple lenses such as that of AML, a VASP or securities law — and that is only within the scope of financial regulation. New trends in one market can quickly become the standard in others. Use of a specific method in one market may become outlawed in others. Innovative firms can often find new opportunities to use regulation for their benefit by closely monitoring the shifting landscape.
Key regulatory shifts in 2020
While not a definitive list, here are some of the key regulatory shifts to watch closely in 2020:
Virtual asset service providers
- Last year, the FATF published new guidance that included definitions of both virtual assets and virtual asset service providers. Around the world, financial intelligence units such as FinCEN in the United States post local updates of their interpretation of FATF definitions.
Firms will be required to implement and maintain an AML program, even if they are “crypto only” service providers that avoid fiat transactions. These changes will take effect in the majority of FATF member countries over the next twelve months. Most notably, today marks the June 2020 deadline in the United States.
- The so-called travel rule, also from FATF, has created significant buzz and misinformation throughout the industry. Most importantly, peer-to-peer or wallet-to-wallet transactions are not included — only transactions where funds are transferred on behalf of the end user by a VASP, with various interpretations setting local thresholds such as $1,000 in the U.S.
Similar to the evolution of SWIFT for bank-to-bank transactions, or the FIX protocol for trades between exchanges, compliance with the travel rule is requiring the industry to collaborate on technology, standards and interoperability. A global standard for VASPs will enable new models of open-source, decentralized finance that is compliant by design.
- Communications: How a VASP markets its products and services or how an issuer markets its token is subject to myriad regulatory requirements. Promising financial returns, spamming potential users or investors, as well as how and where KYC data is stored and processed are all subject to regulation for data protection, consent and disclosure.
- The U.S.: The example of the recent shutdown of Telegram’s TON clearly demonstrates that, in digital securities, compliance by design not only saves considerable time, money and prevents fines or being added to watchlists — it can also be the main factor keeping a project alive.
- In the U.S., Open Finance Network is closing operations largely due to lack of a market. Meanwhile, Nasdaq and Carta are seeking to leverage their massive user bases and established brands to create their own private markets. These trends are repeated in Canada, Europe and Asia — a global race to cracking the holy grail of finance: compliant and automated with multi-jurisdictional liquidity.
- Globally, new regulations for strong client authentication and transaction monitoring require financial service providers to manage a web of complex tools. Digital onboarding is not KYC, the most common reason we see early-stage fintech firms failing a compliance review is because they do not understand the full scope of what it means to know your customer on a consistent basis. By integrating or consolidating systems for cyber security, anti-fraud, onboarding, KYC, AML, etc., these businesses not only make compliance easier — they are architecting scalability into their business. For private capital markets, the platforms that move beyond the false dichotomy of privacy vs. security and strike a balance between risk management and respecting their user’s privacy, data and assets will own the market.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Matthew Unger is founder and CEO of iComply, a global regtech for turn-key digital onboarding, SCA, KYC, AML and data governance compliance. After founding a $42 million wealth management practice, Matthew exited by age 26 and co-founded a wealthtech platform that was later acquired by Planswell in 2015. Matthew has studied blockchain, AI and business strategy at MIT.
3 snippets to begin your day: Bitcoin’s been busy, another crypto-ETP and more
Privacy? What privacy?
While most users of Bitcoin and other cryptocurrencies value their financial privacy, not all of them understand the true nature of Bitcoin. Bitcoin does not guarantee anonymity, but only pseudonymity. This was perhaps the misconception held by a convict who recently lost his appeal before a court in the United States.
The man in question, convicted of child pornography charges, argued before the U.S Appeals Court that law enforcement’s analysis of his on-chain transactions without a warrant amounted to a breach of his fourth amendment right which relates to protection against unreasonable search and seizures.
However, the Court ruled otherwise, stating that the defendant’s expectation of privacy is undercut by the fact that each Bitcoin transaction is recorded on a public, permissionless blockchain. In its ruling, the Court claimed that like traditional banks, exchanges such as Coinbase and their records fall under the Bank Secrecy Act and aren’t protected by the fourth amendment.
Busy day for Bitcoin?
Bitcoin, the world’s premier cryptocurrency, may not be setting the world alight with its exponential price movements over the past few months, but it seems to be doing well on other fronts, with its blockchain noting quite a few highs over the last 24-hours.
Not only did the metrics for hourly new and active addresses hit 2 and 1-year highs, respectively, but the hourly transaction count also touched a 10-month high, with hourly spent outputs with 24hr lifespans surging to a new all-time high.
This comes on the back of a similar rise in Bitcoin’s daily active addresses, another development that many expect could have positive implications for the cryptocurrency’s price. However, that may not necessarily be the case.
Whatever the case, healthy blockchain activity seems to have become the norm for Bitcoin.
Another Bitcoin ETP….. in Europe
While the United States continues to maintain a ‘safe distance’ from crypto-ETFs and ETPs, Europe is busy embracing it, with the latest development on the continent seeing 21Shares’ Bitcoin ETP being listed on Deutsche Boerse’s Xetra, one of Europe’s biggest trading platforms.
The ETP in question, offered by the firm formerly known as Amun, tracks the value of Bitcoin and has already been listed on Switzerland’s biggest exchange – SIX
The sheer size of the trading platform now listing this ETP makes for critical development, with more and more people now getting exposure to the world’s largest cryptocurrency.
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GTA Online Is Bigger Than Ever, Let’s Review it in 2020
Rockstar never meant to support GTA Online for nearly a decade and counting. That was never the plan. Yet GTA Online continues to be updated, and oddly, now in 2020, it’s bigger than ever.
Grand Theft Auto Online launched as part of something else. It was the multiplayer mode attached to Grand Theft Auto V, a huge sequel that would go on to have one of the most successful entertainment launches in human history. Meanwhile, GTA Online would launch a few weeks later in a terrible state. Only a few months after its release players were calling it dead. Rockstar itself has since admitted that the launch was a disaster and it lost a lot of players forever due to bugs, server outages, and a lack of exciting updates.
But now, seven years removed from that awful launch, GTA Online is one of the most popular games in the world. It’s totally eclipsed the game it was originally a part of and will now do something few online games ever have: exist across seven platforms actively and simultaneously. Since release it has grown, changed, and evolved beyond the simple online sandbox it was back in 2013. That’s why, all these years later, I felt it was time to review GTA Online properly.
GTA Online starts with your created character flying into Los Santos. You peer out the window during a cutscene and look down on people racing streetcars and playing tennis. And while you can still do these things in today’s game, they’ve become dated relics of a different era, an era when GTA Online was more grounded, and focused on being serious and gritty. Real-life. Today, a more accurate intro would reflect these changes in content, perhaps having your plane glide over jet bikes, explosive RC cars, roving biker gangs, and huge floating ramps.
In fact, the entire intro and tutorial that starts GTA Online feels old and in need of updating.
You shoot some random gang members, steal back some drugs, race a few streetcars, and change your clothes. Again, these are all things you can still do in GTA Online, but it’s moved far beyond that, and soon your phone will blow up with text messages and phone calls from seven years’ worth of characters and factions.
Jumping into GTA Online today is extremely overwhelming. There are numerous people vying for your attention, different businesses to buy, things to upgrade, events to join, and heists to undertake. Some of these missions and events involve global corporations, the FBI, and powerful criminal kingpins. It is strange that when starting your new game as a nobody, low-level criminal, so many powerful people are falling over themselves to reach out to you. But in a way, it fits. GTA Online’s become a strange game, where you’ll end up owning multiple businesses, several military bases, and dozens of weaponized cars, yet will still be asked to help a random gang member sell a bit of weed. It’s a game where police officers still send cars and helicopters to stop players driving hover tanks and shooting lasers.
This mix of mundane and wild, of over the top and grounded and boring and crazy, is part of GTA Online’s charm. It’s become a giant buffet. And like any large buffet, parts of it feel like it’s only there because, well, it has to be. Nobody really wants those gross, hard little rolls, but if they weren’t there at least a few people would complain. GTA Online has a lot of this content. Nobody plays the parachuting missions in 2020. Nobody cares about boring deathmatches in 2020. Yet it is all part of the big, enormous GTA Online buffet. If Rockstar were ever to remove these older, less-wanted bits it would almost instantly receive complaints from angry gamers who hadn’t’ even touched those modes in years.
Over the years the GTA Online community’s acquired a bad reputation, and a lot of it is deserved. I’ve overheard an incredible number of racists, sexists, and dirtbags while playing this game over the years. So many of them are young boys who seem dedicated to being the shittiest people they can be. But I’ve also met cool folks. I’ve pulled off heists with people from all around the world. And the community is always finding new ways to impress and make me laugh. Some of the stunts people pull off are incredible, and the recent alien war is a great example of how the community can come together in positive ways.
Still, Rockstar isn’t doing enough to help keep this community healthy and positive. It is way too easy to harass other players, even without mods or cheats. And while Rockstar does ban players, many have complained to me about being harassed and targeted with no support or punishment from Rockstar. On Xbox 360 and PS3, GTA V and GTA Online have stopped receiving official updates, becoming lawless wastelands filled with powerful hackers and game-breaking mods. At this point, it makes sense to just shut it down on those older platforms and maybe, with the upcoming launch of new versions on PS5 and Xbox Series X, it will do just that.
Fan and community sentiment toward Rockstar has shifted a lot since GTA Online launched. At first, folks were excited about the future of an online Grand Theft Auto game. But while some are still happy, a growing number of fans feel Rockstar is squeezing them for every penny they have. Looking at the rise of in-game prices it isn’t hard to agree. Some recently-added clothing costs more than sports cars released during the first year. But payouts on missions and events haven’t really scaled upward as content’s become more expensive.
This leaves players with two options: Grind for more money to buy all the new toys or buy Shark Cards using real-world money to quickly fill their digital bank. This is the main point of tension between Rockstar and longtime players. Many players feel like Rockstar is making GTA Online more of a grind to earn more money. And the company recently added a casino, too. That only added more fuel to this fire as players could, in theory, use real-world money to buy Shark Cards, and use those to purchase in-game chips to gamble with, a situation so legally iffy the company had to shut off some of these features in countries with stricter gambling laws
In GTA Online’s defense, while prices on items have gone up, a vast majority of the content can be played freely or with very little in-game investment. For example, that new casino is free to enter, provides players with free chips every day, and has a prize wheel they can spin once a day at no cost. On the flip side, if you want to do the new casino heists and don’t have a rich in-game friend, you’ll be shelling out a not-insignificant amount of real-world cash to earn your way to that content. It’s this clash between offering free content and hiding some content behind small or large paywalls that has created a rift between Rockstar and its fans. And as each year passes without a new mainline GTA, and GTA Online updates continue to feature more and more expensive items, it seems this rift will only grow.
Whether you are an angry old player or a newbie jumping in for the first time, you’ll quickly discover that GTA Online’s narrative is a total mess in 2020. When the game launched, Rockstar explained that it was set before the events of GTA V, a game that itself is set around 2012. This all made sense. It worked. But over the years timelines have shifted, and this no longer seems to be the case. Characters will reference 2018 and new songs released after 2012 are now on GTA Online’s radio. Yet meanwhile, characters who died in GTA V, set in 2012, can still interact with your character while you’re busy doing missions supposedly set in 2018 or later.
But none of that really matters anymore. GTA Online has long abandoned the grounded world and narrative it launched with in favor of becoming a giant content platform, where both Rockstar and players can create and share wild game modes and maps. Huge floating race tracks with transforming vehicles and power-ups are some of the most popular things in GTA Online these days, with players creating and uploading their own versions using the in-game creator tools. These tools launched a few months after GTA Online went live, but didn’t become truly popular until the PS4 and Xbox One versions launched.
Now players can create new content for seven game modes and upload them for others to play and enjoy. And they can do all this with little to no involvement from Rockstar Games. The developers sometimes highlight creations they find exciting or fun, but by and large, the community runs and operates this huge chunk of the game themselves. Even if one-day Rockstar stops supporting GTA Online, it will continue to get new content from dedicated creators for years. In a way, Rockstar’s created a giant monster that it couldn’t really kill, even if it wanted to.
While GTA Online continues to grow and grow, both thanks to fans and Rockstar’s official updates, the world and game are starting to strain at the seams. Spending nearly a decade in the same map has started to make things feel… boring. The world feels static, and there’s only so many times I can drive from the desert to the city during a mission before I start to find myself wanting a change of scenery. And even as its file size grows, it’s starting to show its age. This is still, at its core, a 2012 Xbox 360 and PS3 game. While textures have improved and draw distances have increased, based on what Rockstar’s added, it seems there’s only so much it can do.
A lot of the new content uses the same basic gameplay mechanics and systems. New missions often feature old areas repurposed, and many races rely on similar track pieces and map chunks. I get the sense that Rockstar is unable to really shake up the world or game in a big way, lest it break everything in the process.
For example, the big and shiny new casino that was added last year is impressive, until you realize it is just an empty facade, with the new content hidden behind multiple, noticeably slow loading screens. It all feels creaky and old, like one-day Rockstar will add one too many cars to the game and the whole thing will collapse like a sandcastle.
In reality, It’s unlikely GTA Online will end in such an embarrassing and wild way, but that leads to the biggest question on my mind as I get ready to play this game on a whole new generation of consoles: How will GTA Online end? As much money as it makes, GTA Online might seem like it will go on forever, but that is just as unlikely as the whole thing collapsing under its own weight. So how and when will it end?
There is always the possibility that GTA Online will move forward with Grand Theft Auto VI. But that seems less likely today then it did back in 2015 or so. Today, GTA Online feels too old and rickety to be carried forward into a future GTA VI. When it does finally depart, I’ll miss GTA Online more than any other game, which is strange to think about. This is a game with a large and often shitty community, with tons of filler and boring content and server issues. But I love it. It’s this weird little world where I always have something to do and when it finally shuts down, I’ll miss it all.
Grand Theft Auto Online is a better game today than it was back in 2012, 2014, or even 2017. In 2020, Grand Theft Auto Online feels both like a dinosaur from a different era, but weirdly, also just as relevant as ever. It was one of the first “games-as-a-service” released all the way back in the last generation. Since its rocky launch, it has become one of the most successful games ever made, and yet no one’s really copied it. I think this is a testament to just how hard it is to make one of these always-online open-world games. The only true clone of GTA Online is Red Dead Online, another game being developed by Rockstar. It seems Rockstar might be the only studio willing, able, or crazy enough to try and make these things.
And I’m thankful for it making GTA Online. After 676 hours, I still enjoy logging in and playing with friends or just going around solo doing whatever I want to do that day. And it seems, based on Rockstar porting it to the new machines, that I’ll end up putting another 600 hours into this game before it’s all over. And that’s fine. I don’t mind at all. GTA Online is a great game and a world I love returning to, even when some 12-year old decides to blow me up.
Cardano, IOTA, Dash Price Analysis: 02 July
Many of the market’s altcoins have been noting steady and marked growth on the charts over the past few days. However, such a price appreciation, unusually, was not led by Bitcoin, with the king coin moving sideways lately while facing a lot of bearish pressure.
The sharpest performer among the top cryptocurrencies was Cardano [ADA]. The ninth-largest coin on CoinMarketCap’s list managed to return 188.85% in profits to its investors in YTD. ADA recorded a great surge yesterday and it has since been registering spurts of growth on the charts.
This bullishness in the market has to do with the progress made by the ecosystem towards the Shelley upgrade. With the Shelly hardfork scheduled for later in the month, Cardano released the Shelley-complete node on the mainnet yesterday.
This definitely garnered support from the Cardano community, with the coin on a bullish path for the past few days. According to the Parabolic SAR, the coin’s price trend changed a few days back. The dotted markers aligned under the price candles, highlighting an upward price move while also pointing to bullishness in the market.
The mid-cap asset, IOTA, has been returning nearly 42% in YTD to investors and has remained a better performing asset than most major cryptocurrencies. In fact, at the time of writing, IOTA was noting great bullish momentum after registering six consecutive green candles on the charts. At press time, the price of IOTA was $0.2341, with the support remaining at the base of the sixth green candle at $0.2008, while resistance was still at $0.2562.
This bullishness in the market was confirmed by the Bollinger Bands. The Bollinger Bands appeared to be opening up, indicating that there might be some volatility in the IOTA market; however, the signal line had snuck under the price candles, underlining the bullish behavior of the market.
This growing momentum could be associated with Wednesday’s announcement of a “coordinator-less” network, the IOTA 2.0 plan to rival smart-contract platforms like Ethereum, EOS, Tron, and Cardano.
Another mid-cap asset, Dash has been outperforming many large-cap assets with a return of 62.64% in YTD. The coin’s price was moving sideways over the past few days and was trading at $67.79, at the time of writing, close to its immediate support at $65.94. The immediate resistance remained as high as $77.04.
Despite the fight put up by the market, however, it had lost some momentum as the Awesome Oscillator was dipping into negative territory.
This suggested that short-term momentum had fallen faster than the long-term momentum in the market, representing a bearish selling opportunity.
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