The blockchain and cryptocurrency industry not only develops in its own space but constantly influences other verticals as well. Moreover, it brings changes to the regulations at a state level as governments want to take control of crypto.
The cryptocurrency news and events in this market resonate with the audience, sparking the interest even of those who haven’t been involved in the industry before.
Cal Evans, a cryptocurrency lawyer and strategy expert, has cleared up the hottest topics about crypto and its recent developments.
Cryptocurrency has undoubtedly been booming in popularity within the last several years. How did it transform the global payments vertical?
Cryptocurrencies have had a massive impact on the global payments industry. If we take cross-border transactions as an example. It is now easier than ever to remit payments from one party to another, regardless of their geographical location. In practice, this means that it’s quicker and easier to send funds to anyone, anywhere in the world, with little to no obstacles. Companies that operate a more traditional cross-border payments model are already seeing the impact.
Additionally, we can see changes already in our day-to-day spending. Most vendors and card merchants have had to accept the reality of crypto as a spendable asset. There is currently a race to see who can develop/accept crypto within their existing network. We can see players like PayPal, Venmo, and others already deploying crypto within their payments network, which can be used in stores.
How does DeFi influence traditional finance?
DeFi is the concept that things are decentralized. Traditional finance deploys a very “centralized” model. As a result, the two models are at the total opposite ends of the financial spectrum. Traditional finance is based around the concept of paying or rewarding third parties for the ability to use your own money. When we think of it in that way, it is slightly mind-blowing. DeFi allows people to have direct access to their finances, and to each other.
Because of this shift in thinking, we can already see traditional finance doing everything it can to stop/silence the DeFi industry. Promoting it as unsafe, unregulated, or even illegal! If the global payments vertical are trying to adapt, the traditional financial institutions are fighting back. However, if a group of companies had run a monopoly for so long, it is highly unsurprising.
What are the major cryptocurrency compliance risks?
Cryptocurrency carries exactly the same compliance risks as traditional fiat currency. Where there is money, there will be bad actors. That is just, sadly, the way the world works. Most people don’t realize that blockchain and DLT (the underlying technology of crypto) can actually stop most of the problems we see with traditional finance if deployed properly.
Blockchain and DLT offer the ability to remove money laundering and terrorist financing. Sure, it is not perfect, but it actually builds in more safety protocols than just plain old cash. Proving that companies are running their business properly, there are no more compliance risks than anything else in the market at the moment.
What about the AML regulations for cryptocurrencies? How do they differ from other industries?
AML regulations in the crypto industry are a healthy thing. Nobody actually wants to allow bad actors or terrorists to be able to funnel and distribute their gains. The AML laws for the crypto industry are, for the most part, the same as they are for the regular industry. In some countries, they are more relaxed, but on the whole, complying with AML laws is something most all crypto companies have to do now. Especially in places like Singapore, the EU, and the USA.
Let’s talk about blockchain in the IT business. What can blockchain solutions improve in a company? Should companies start investing in such solutions now?
100%! I remember the technology “waves” of big data and cloud-based computing. They were buzzwords, but the actual technology assisted companies in a lot of ways. The same is true of blockchain. We can see its application already being used within industries like healthcare, transport, agriculture, and logistics.
The safety protocols it can help companies deploy, along with the verification standards are unmatched. There are also some pretty cool fringe uses, which we will see evolve in the next few years. Essentially, if you are in an industry where you have a level of “accountability” to someone else, the deployment of blockchain could help you meet those standards very easily.
From investors’ point of view, what is necessary to pay attention to in the crypto world?
The first thing is the word “investor”. Not all projects have “investors”. So you should watch out for that whenever you are looking at a project. The second thing is that the risk vs. reward matrix is totally unlike anything we have seen before. The market volatility is totally unpredictable (for the most part). There are key indicators like many other financial industries, however, it is undoubtedly turbo in the crypto world.
Those looking to get into the crypto space should understand that there are many different tokens doing many different things. They are “energy” driven, which means the thing driving the price is often nothing more than the excitement around the project itself.
As long as you have the ability to research and research more. You should be ok. Also remember, never put more into the crypto industry than you can afford to lose.
What about the adoption of cryptocurrency by governments? Why are governments afraid of cryptos?
Most governments are now exploring deploying their own cryptocurrency. I think most of them are waking up to the concept of digital currency being a very good thing. Most governments are not “afraid” of crypto per se, they are more concerned with the way in which it gets people out of the traditional financial model.
As far as governments are concerned, they have spent decades perfecting the financial models, laws, rules, and regulations. New technology coming into that space is often slowly deployed, and in turn, regulated. Crypto was the opposite to that. If we take, for example, the SWIFT network, it was tested, deployed, and built into existing financial rules and regulations. Crypto, on the other hand, simply kicked the door in and took a seat at the table.
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