Understanding Cryptocurrencies’ Shadow Side and the Importance of Transparency

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  • Concerns on Misuse of Crypto in Fraudulent Activities
  • India’s Advocacy for Cryptocurrency Regulations
  • Need for Stringent Measures as Russia Already Dodges Set Limits in Crypto

Concerns on Misuse of Crypto in Fraudulent Activities

The U.S. Secretary of the Treasury, Janet Yellen, has expressed her concern about the misuse of crypto in illegal activity and the absence of openness in certain crypto operations. Yellen discussed cryptocurrencies in a Reuters interview, saying that she does not consider them to pose risk exposures to the financial sector.

She underlined the need for a legal system that protects consumers and stops financial fraud. In addition, the usage of cryptocurrency for illicit purposes and the absence of full disclosure in certain blockchain operations were further concerns raised by Yellen.

India’s Advocacy for Cryptocurrency Regulations

At their summit, the Group of 20’s financial and banking system leaders acknowledged the ongoing debate over cryptocurrencies’ governance. An absolute prohibition that India, the G-20 chair, was considering, unable, however, to garner support.

IMF’s managing director, Kristalina Georgieva, underlined the need to discern across virtual currencies provided by federal reserves that are government-backed, stablecoins, and independently generated crypto commodities.

Yellen clarified that while she did not advocate for a complete ban on cryptocurrency-related activity, she emphasized the significance of implementing a robust set of regulations.

The International Monetary Fund’s Financial Stability council has been requested by India to work together and create a technical study on cryptocurrency assets, which might aid in developing a coordinated and comprehensive policy to oversee cryptocurrencies. The technical study results will be presented in an October meeting later this year.

Need for Stringent Measures as Russia Already Dodges Set Limits in Crypto

Many of the biggest online asset facilitators have failed to implement safeguards to prohibit Russian banks subject to bans from using their systems, claims research by blockchain consultancy company Inca Digital. The findings were made public one year after Putin invaded Ukraine.

Politico has reported that market participants still can conduct transactions on peer-to-peer operating systems of 2 different Seychelles marketplaces, Kucoin and Huobi, using card payments approved by Russian-based banks that have been sanctioned by many nations, such as Canada, the United States, European Union as well as the United Kingdom.

Russia’s Sberbank is among the blocklisted banks. Even though the two exchanges, Kucoin and Huobi, don’t embrace funds from the banned banks, Adam Zarazinski, the CEO of Inca Digital, claimed that enabling traders to use accounts with these banks to conduct cryptocurrency trading represents a breach of European and the U.S. restrictions with a little of a backdoor. The discussions still need to address the conclusions.

Data from 163 cryptocurrency exchange systems, including decentralized and centralized markets, P2P networks, and over-the-counter (OTC) network operators, were evaluated as part of research by Inca Digital.

Over 50% of these sites, according to the study, permit Russian citizens to buy cryptocurrency, though with various KYC (know-your-customer), trading volume, and geographical restrictions. For instance, Singapore’s Bybit permits consumers to deposit via all Kremlin-issued cards and change rubles to cryptocurrencies on its cloud platform.

The global leader in trading activity, Binance, was also mentioned in the research as having possible weaknesses. The report claims that Binance provides Russians with various ways to exchange their rubles for crypto, including via its peer-to-peer and over-the-counter marketplace.

The article also mentioned that Binance does not require KYC checks for transactions up to $10,000 made by Russian clients. The Inca Digital research also highlights using Tether, a stablecoin tied to the United States dollar, to get around regulations imposed on Russia.

The use of Tether for remittances has become more popular on Russian social media networks. Zarazinski claims that Russians frequently transfer cash to other countries via Tether.

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